Gold 2025: Exceptional Performance Drivers and Near-Term Future Outlook

Introduction: Why Gold Has Become the Star of Investment Performance

History has defined gold as a store of wealth and a guardian of savings’ value across centuries. However, 2025 has witnessed an extraordinary phenomenon: gold prices have achieved growth of over 47% since the beginning of the year, outperforming most major global financial assets. This meteoric rise was not accidental but the result of a complex intersection of economic and geopolitical factors moving in rare synchronization.

Economic Factors: Pressures from Multiple Directions

US trade policies and tariffs

The year started with a wave of trade tensions. The US administration imposed new tariffs on imports from multiple countries, raising concerns among investors and institutions. This policy, which peaked on “Liberation Day” (April 12), drove capital toward the traditional safe haven—gold. The idea was clear: amid trade uncertainty, investors choose a metal that does not lose its value.

Dynamics of interest rates and inflation

The first half of 2025 saw heated debates over the US interest rate path. Despite a weak labor market and manufacturing activity, the Federal Reserve remained cautious due to inflation fears. According to IMF data, global inflation is expected to reach 4.2% in 2025—a high level compared to historical averages (2-3%). But on September 17, the Fed made a decisive move: cut interest rates from 4.5% to 4.25%, with immediate impact—gold jumped by 22.9% in September alone.

Geopolitical Dimensions: Crises and Tensions

Military conflicts and shipping routes

Economic pressures alone were not enough. The Asian region and the Middle East experienced real military escalation. On June 13, Israel and the US conducted military operations against Iranian oil facilities, followed by Iranian missile responses. These developments raised genuine fears of a disruption in the Strait of Hormuz—through which about 20% of the world’s oil passes. The risks to global supply chains pushed investors toward gold as insurance against catastrophic scenarios.

US internal political crisis

On September 30, the US Congress failed to agree on a government funding continuation law, leading to a partial government shutdown. This shutdown is not just a passing political event—it threatens to delay the release of vital economic data and casts uncertainty over the US economy’s health precisely when investors need more clarity.

Institutional Demand: Fuel for Real Growth

Behind the figures and news headlines, there is a deeper story about structural demand for gold:

In the first half of 2025 alone:

• Gold prices rose by 26% according to the World Gold Council
• Daily trading volumes reached a record level of $329 billion
• ETFs increased their holdings by 41% to reach $383 billion

These numbers reveal an important truth: major institutions—central banks, investment funds, and managers—were actively buying. Especially central banks continued increasing their gold reserves as part of a diversified strategy to protect against external shocks.

Expected Scenarios for the Coming Months

Scenario One: Relative Stability

If the political and economic situation stabilizes—meaning no worsening government shutdown or large-scale military confrontations—gold may move within the range of $3,500-$3,600 per ounce, achieving an annual return of about 34%.

Scenario Two: Escalation and Stagflation (Most Likely)

This scenario—currently the most probable—assumes continued economic pressures and geopolitical tensions. In this case, the Fed may face a real dilemma: lowering interest rates could upset inflation, but not cutting them might lead to recession. Under this scenario:

• Minimum expected: $4,100 by the end of 2025 (Annual return 56%)
• Maximum: $4,400 (In case of broad military escalation)

Technical Analysis: Chart Reading

From a technical perspective, gold has been in a strong upward trend since mid-2024. It has broken key resistance levels ($3,700 and $3,800) and is now testing higher levels.

Current levels:

• Strong resistance: $4,050 (Upper Bollinger Band)
• Psychological resistance: $4,000
• First support: $3,900
• Second support: $3,819
• Critical support: $3,700

Momentum indicators: MACD remains positive, but the histogram has started to slow—an early sign of a potential correction.

Most likely technical scenario: A short-term correction toward $3,820-$3,900 during October, followed by a gradual resumption of upward movement through November and December toward $4,100-$4,200.

Different Investor Strategies

Long-term investors: Hedge against inflation

These aim to hold gold for more than a year, to protect capital from inflation erosion. Central banks and major investment funds are the main players here. Their goal is not quick profit but wealth preservation over time.

Short-term traders: Benefit from volatility

These buy and sell multiple times within weeks or days. This requires:

• Close monitoring of news and economic data
• Mastery of technical and fundamental analysis tools
• Skill in identifying entry and exit points

Traders can access gold through various methods: direct purchase, investment in gold funds, mining company stocks, or trading CFDs (CFDs), which offer leverage but involve higher risks.

Practical Recommendations

Portfolio Diversification

Market experts agree that the gold portion of an investment portfolio should not be less than 15% of total value to absorb sudden shocks. Some major funds have started increasing this percentage to 20% to reflect the current uncertain environment.

Medium-term timeframe

If your investment horizon is 6-12 months, now may be a good opportunity to enter, with an expected short-term correction that could provide better entry points.

Summary

Gold prices in 2025 have not reached record levels by chance—they reflect real pressures in the global financial system. Data indicates that stability around $4,100 by year-end is a reasonable scenario under current conditions, with the potential to surpass this level if geopolitical or economic situations worsen. Wise investors do not rely on a single event but build their portfolios based on a deep understanding of the multiple factors driving markets.