Gold Shines Brightest in 2025

Precious metal outperforms all assets – and may have further to run

Gold Leads the Pack in 2025

Gold has claimed the spotlight as the best-performing asset of 2025, outpacing shares, bonds, currencies, and even cryptocurrencies like Bitcoin. According to the Chief Investment Office at UBS, gold has delivered a remarkable 28% gain year-to-date, with no signs of slowing down.

On 18 August, spot gold was trading at $3,337 per ounce. UBS has since upgraded its year-end forecast to $3,500, citing a range of economic and geopolitical factors expected to keep demand high.

Why Gold Is Soaring

Several macroeconomic and global themes are contributing to gold’s surge in 2025:

Key drivers include:

• US fiscal concerns: Growing scepticism around long-term American debt sustainability.
• Federal Reserve uncertainty: Questions about the central bank’s independence are fuelling market volatility.
• Geopolitical instability: Ongoing global tensions are increasing the appeal of safe-haven assets.
• De-dollarisation: Countries are moving away from the US dollar, with central banks turning to gold instead.

UBS also expects central banks to remain net buyers of gold, albeit possibly slightly below last year’s near-record levels.

Investment Demand Is Climbing

The World Gold Council reported that 2025 has seen the strongest first-half ETF inflows since 2010. UBS responded by raising its gold ETF demand forecast to 600 metric tonnes, up from its previous projection of 450.

This surge in investment interest underpins gold’s momentum, reinforcing its role not only as a hedge against uncertainty but also as a high-performing asset in its own right.

Total global demand is expected to:

• Rise by 3% in 2025
• Reach 4,760 metric tonnes, the highest level since 2011

Market Context: A Tightly Traded Range

Despite the impressive long-term uptrend, gold has remained relatively stable in recent weeks. This is largely due to:

• Shifting US trade policy
• Hopes for a Russia-Ukraine peace breakthrough
• Softer US employment data

Still, the underlying narrative supports further upside.

UBS believes tariff-related inflation and potential immigration restrictions could prompt the US Federal Reserve to resume policy easing. If that leads to lower real yields, the cost of holding gold — which pays no interest — decreases, making it even more attractive.

What Could Happen to Gold Prices Next?

UBS has lifted its 2026 forecast, predicting gold will:

• Hit $3,600 by March 2026
• Reach $3,700 by mid-2026

If inflation pressures persist or global tensions rise further, gold could even surpass these forecasts. Additionally, if the US dollar weakens amid policy shifts, that could amplify gold’s appeal for international investors.

Factors that could push gold higher:

• Slower US growth
• Rising ETF inflows
• Central bank accumulation
• Lower interest rates globally

That said, a surprise rate hike from the Fed could temper some of this enthusiasm.

Conclusion: Is Gold Still a Buy?

With its stellar performance in 2025, gold has reasserted its role as a safe-haven asset and portfolio diversifier. UBS continues to view gold as “attractive” within global asset allocations.

Key takeaways:

• Gold has outperformed all major asset classes so far in 2025.
• Demand is being fuelled by institutional flows, central banks, and investor uncertainty.
• The medium-term outlook remains positive, with forecasts pointing to even higher prices in 2026.

For long-term investors seeking hedging, stability and inflation protection, gold remains a golden opportunity — and could continue to shine in the months ahead.

Sources: (Fool.com, Investing.com)