Gold rally surges ahead with $3,500 target in sight by end of 2025
Gold is experiencing an extraordinary rally in 2025, with prices and demand soaring amid global economic uncertainty, according to the latest report from the World Gold Council (WGC). In the second quarter alone, global demand reached a record-breaking $132 billion, marking the highest quarterly value ever recorded.
This surge comes as investors flock to the precious metal amid mounting inflation concerns, a weaker dollar, and heightened geopolitical risks. The average gold price in Q2 climbed to $3,280.35 per ounce — a new high — while Citi now predicts the price will hit $3,500 before the year ends.
Investment flows lead the charge
Investment activity has been the primary driver of gold’s rapid ascent. Investment inflows jumped by 78% compared to the previous quarter, with exchange-traded funds (ETFs) alone accumulating 170 tonnes of gold. Demand for gold bars and coins also remained strong, particularly in China and Europe.
In a notable shift, individual investors in China spent more on gold as an investment than on jewelry — a first for the country. Meanwhile, central banks continued to buy gold, though at a slower pace, acquiring 166 tonnes in Q2 — 33% less than the previous quarter but still 41% above the 2010–2021 average.
Despite the slowdown, the WGC believes the outlook for central bank reserve accumulation remains positive.
Jewelry and tech demand slump
While investment demand surged, gold use in other sectors declined. Jewelry consumption dropped sharply, falling 30% below the five-year average to 341 tonnes. China and India, typically the largest markets for gold jewelry, together accounted for less than half of global demand — a rare occurrence seen only three times in the past five years.
Gold demand in the technology sector also dipped slightly by 2%, largely due to reduced exports and slowing manufacturing in East Asia. However, increased gold usage in AI technologies is helping offset some of the decline.
Supply growth hits new highs
On the supply side, global mine production reached a record 909 tonnes in the second quarter, boosting total supply by 3%. Gold recycling also increased by 4%, reaching 347 tonnes — the highest level since 2011. Still, many gold holders are reluctant to liquidate, despite historically high prices.
Looking ahead: All eyes on the Fed
The WGC expects investment demand to remain strong throughout the remainder of the year. However, the rally may slow if the U.S. dollar continues to strengthen and equity markets maintain their momentum.
That said, markets are increasingly pricing in a U.S. interest rate cut as early as September. According to CME’s FedWatch, there is currently an 85% probability of a rate cut, driven by recent weak employment data and renewed speculation of monetary easing by the Federal Reserve.
Citi forecast: $3,500 and beyond
Citi has raised its gold price forecast to $3,500 per ounce for the coming quarter, citing slowing U.S. growth, inflationary pressures, tariff concerns, and a weakening dollar. Gold has already gained nearly 30% since the beginning of the year.
Analysts believe that if the Fed proceeds with rate cuts and global geopolitical tensions continue — particularly with countries such as India, Canada, Brazil, Taiwan, and Switzerland — gold could reach even greater heights.
Amid economic uncertainty and shifting monetary policy, gold is reclaiming its position as a safe-haven asset, far surpassing its traditional role as a hedge against inflation. With all indicators pointing toward continued strength, 2025 may prove to be a historic year for the precious metal.
