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Informist, Tuesday, Jul. 15, 2025

 

MUMBAI – Gold prices, which have risen 26% in dollar terms this year, could remain rangebound in the second half of the year with a possible upside between 0% and 5%, the World Gold Council said in a report analysing views from economists and market participants. Consensus expectations suggest a relatively steady finish for gold with moderate upside potential if macroeconomic conditions hold, it said.

 

However, if economic and financial conditions deteriorate, exacerbating stagflationary pressures and geo-economic tensions, safe-haven demand could increase significantly and push gold 10-15% higher from current levels. On the flip side, widespread and sustained conflict resolution, which appears unlikely in the current environment, would see gold give back 12-17% of this year's gains, as per the report.

 

Gold has been one of the top-performing major asset classes in 2025, recording 26 new all-time highs in the first half of the year. "The second half of the year sits on a seesaw, with geoeconomic uncertainty keeping investors on edge," according to the report. "Inflation data have shown signs of improvement, but concerns remain that conditions could deteriorate quickly."

 

Meanwhile, technical indicators suggest gold's consolidation phase over the past few months is a healthy pause in a broader uptrend and is easing previously overbought conditions and potentially setting the stage for a renewed upside. Demand for the precious metal from central banks is likely to remain robust this year, as per the report.

 

However, sustainable geopolitical and geoeconomic conflict resolution would reduce the need to keep hedges, such as gold, and, in turn, encourage investors to take on more risks. "The reduction in risk, combined with an increase in opportunity cost--through rising yields and a stronger dollar--would trigger gold ETF (exchange-traded fund) outflows and reduce overall investment demand," the WGC said in its report. "We could also see a deceleration in central bank demand if US Treasuries are again favoured," it added.

 

Technical analysis of the gold market and speculative positioning suggest that $3,000 per ounce would be a natural "support level" prompting opportunistic investment buying. If gold were to break through this level, disinvestment may accelerate, the WGC said. But lower gold prices would attract more price-sensitive consumers, limiting the precious metal's downside compared to what is implied by only considering real rates and the dollar.

 

"In all, given the intrinsic limitations of forecasting the global economy, we believe that gold--through its fundamentals--remains well-positioned to support tactical and strategic investment decisions in the current macro landscape," the council said.

 

At 2010 IST, the most-active August gold contract on COMEX was trading slightly lower at $3,356.6 per ounce.  End

 

US$1 = INR 85.81

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Ashutosh Pati

Edited by Rajeev Pai

 

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