Gold's Relentless Rally Sets Multiple Records

Gold's historic surge continues unabated in 2025, with the precious metal notching its twentieth record high of the year at $3,245.28 while delivering a stunning 19% gain in the first quarter alone.

Where is the top? Record gold prices on an almost daily basis

This relentless climb, which has pushed prices up 6% in just the past week, comes amid a complex interplay of investment flows and market dynamics. While central banks maintain their robust buying pace of over 1,000 tonnes annually, ETF inflows have surged to 217 tonnes in Q1 2025, even as Western physical demand shows signs of weakness and jewellery buyers display increasing price sensitivity.

Against this backdrop, major financial institutions are recalibrating their forecasts upward, with UBS projecting $3,500 by year-end and Argonaut seeing potential for $4,000 by 2027, suggesting the gold market's momentum may be far from exhausted. As trade tensions escalate and global economic uncertainties mount, let's examine the forces driving this extraordinary rally in the world's oldest safe-haven asset.

Keeping Up With Daily Highs

Gold's exceptional performance has reached new heights in early 2025, with the precious metal touching a fresh all-time high of $3,245.28. Currently trading at $3,239, gold has demonstrated remarkable momentum, surging approx 6% in the past week alone and marking its twentieth record high this year. The precious metal's trajectory has been nothing short of extraordinary, with a substantial 19% gain recorded in the first quarter of 2025.

The metal's price action reveals a pattern of sustained strength rather than speculative spikes, with each new record establishing a higher foundation for further advances. This methodical climb stands out particularly when compared to historical rallies, as the current uptrend has maintained its momentum despite periods of profit-taking and market consolidation. The frequency of new records - twenty in just over three months - underscores the robust nature of the current bull market, suggesting a fundamental shift in how investors value the precious metal.

The technical resilience displayed in gold's price movement is particularly noteworthy given that it builds upon an already impressive 26% gain from 2024. Even at these elevated levels, the market has shown remarkable stability, with intraday dips being consistently met with strong buying interest, demonstrating the depth of underlying support for gold's upward trajectory.

Investment Flows: Diverse Forces Shape Gold Demand

The gold market in early 2025 has witnessed a remarkable divergence in demand patterns across different segments. ETF investments have shown particular strength, with inflows reaching 217 tonnes in Q1 2025 alone, while central banks maintain their substantial presence with consistent annual purchases exceeding 1,000 tonnes over the past three years. This institutional demand stands in stark contrast to subdued physical buying in Western markets and price-sensitive jewellery segments.

The resilience of central bank purchasing, maintaining levels above 1,000 tonnes annually from 2022 through 2024, reflects a continued strategic shift toward gold as a reserve asset.

However, this institutional strength has not translated to retail demand, with Western physical markets for bars and coins showing notable weakness despite rising prices.

Jewellery demand has demonstrated clear price sensitivity at current record levels, with buyers becoming increasingly hesitant as gold pushes beyond $3,200 per ounce. This pattern suggests a market increasingly driven by professional investors and official sector buying rather than traditional retail and jewellery demand.

The contrasting demand dynamics paint a picture of a gold market in transition, where institutional flows have become the dominant force while traditional physical demand takes a back seat. The substantial ETF inflows of 217 tonnes in just the first quarter of 2025, combined with sustained central bank appetite, indicate that large-scale strategic buyers remain confident in gold's value proposition even at historic price levels.

Market Forecasts & Analysis

Leading financial institutions have released increasingly bullish gold price forecasts, reflecting the precious metal's strong fundamental backdrop and growing macroeconomic uncertainties.

UBS stands out with one of the most optimistic near-term outlooks, projecting gold to reach $3,500 by the end of 2025. This forecast is supported by Citibank's more immediate view of $3,200 within a three-month timeframe, though they maintain a more moderate twelve-month target of $3,000. Are you bullish or bearish - is it up only from here?

Looking further ahead, RBC Capital Markets presents a measured perspective, forecasting an average price of $3,039 for 2025, rising to $3,195 in 2026. This gradual upward trajectory aligns with their analysis of sustained central bank buying and geopolitical tensions. Perhaps the most ambitious long-term projection comes from Argonaut, which envisions gold reaching $4,000 by 2027, predicated on continuing dollar weakness and the potential for sustained elevated inflation levels. These varied forecasts, while different in magnitude and timing, share a common thread in recognising gold's strong upward momentum and the confluence of supportive macro factors driving prices higher.

No doubt there is significant tailwinds of political risk that to me at least are hard to imagine intensifying, minus some all out war. As initial panic and anxiety wanes so too will inflows and perhaps even subdue price action. Depends how much price action is related to risk and how much to long term strategic fundamentals of central bank buying.

Economic Headwinds Drive Market Expectations

The economic landscape is being significantly reshaped by escalating US-China trade tensions, with China's dramatic increase in tariffs to 125% on US imports marking a serious escalation in trade relations. This aggressive policy stance coincides with broader economic signals pointing toward monetary easing, as evidenced by March 2025's unexpected 0.4% decline in US Producer Price Index (PPI), suggesting mounting deflationary pressures in the production pipeline.

Market participants have sharply adjusted their rate expectations, now pricing in approximately 90 basis points of Federal Reserve rate cuts through the end of 2025. The timing consensus has crystallized around June 2025 for the first cut, reflecting growing confidence that the Federal Reserve will need to pivot toward accommodation. The combination of declining producer prices and heightened trade barriers has created a complex economic environment where both growth and inflation trajectories are being questioned.

These economic drivers are creating a potent mix of uncertainty in global markets. The dramatic escalation of Chinese tariffs represents a particular concern, as it threatens to disrupt global supply chains and potentially accelerate the trend of economic decoupling between the world's two largest economies. When viewed alongside the deflationary PPI reading and anticipated monetary easing, these factors suggest a challenging period ahead for global economic growth and trade relations.

Final Remarks

Gold's extraordinary performance in early 2025, marked by 20 new records and a peak of $3,245.28, reflects a transformative period in precious metals markets. The metal's 19% gain in Q1 2025 has been supported by robust institutional flows, with ETF inflows reaching 217 tonnes, while central banks maintain their significant presence with consistent 1,000-tonne annual purchases.

Market forecasts remain decisively bullish, with major institutions projecting continued strength - from UBS's $3,500 target to Argonaut's ambitious $4,000 by 2027 outlook. However, the market shows notable divergence between institutional and retail demand, with Western physical buying remaining subdued and jewellery demand displaying price sensitivity at current levels.

The backdrop of escalating U.S.-China trade tensions, evidenced by China's 125% tariffs on U.S. imports, combined with March 2025's unexpected 0.4% PPI decline, reinforces gold's haven appeal. With markets pricing in approximately 90 basis points of Federal Reserve rate cuts through 2025, beginning in June, the macroeconomic environment appears increasingly supportive of sustained precious metals strength.

This confluence of robust institutional investment, supportive macroeconomic conditions, and geopolitical tensions suggests gold's record-setting run may have further room to extend, even as the market navigates varying demand dynamics across different buyer segments.

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