Is gold the trade of 2025?

For professional and qualified investors only. Capital at risk.

22 April saw gold hit $3,500/oz for the first time¹. This was spurred by investors’ flight for safety following President Trump’s criticism of US Federal Reserve (Fed) chair Jay Powell, leading investors to fret about the future of the world’s most important central bank.

Although fears over the Fed eased following President Trump’s subsequent comments, the gold spike wasn’t simply a one-off, but instead a continuation of a trend of pronounced and rapid upward moves since the start of the year.

Only last month the gold spot price broke $3,000/oz². Gold moved from $2,500 to $3,000 in 210 days, compared with the historical average of around 1,700 days to notch a $500 gain³. Clearly, the latest leg higher makes even this rapid ascent appear relatively pedestrian. 

A long-term perspective

We believe it’s important to put recent price moves in a longer-term context, and to focus on the underlying drivers of performance rather than short-term moves. In a recent video we explored the potential use cases for gold in a multi-asset portfolio, noting that the metal has long been a beacon of stability in uncertain times.

So far in 2025, this trend has continued, with ongoing geopolitical uncertainty in the Middle East and Ukraine bolstering gold's appeal as a perceived stable asset.

US economic outlook darkens

Also adding to the appeal of gold is increasing wariness over the economic outlook for the US, raising expectations of a weaker dollar. The US dollar has already lost 8% YTD and at least one rate cut is expected by the next three months.⁴

The Citigroup Economic Surprise Index, a measure of economic data surprises relative to market expectations, entered negative territory in March, suggesting that economic data releases have recently been underwhelming analysts’ estimates. Additionally, the Federal Reserve has trimmed 2025 US GDP growth expectations from 2.1% to 1.7%.

The recent shift to bearishness on the outlook for US equities was also reflected in investment flows that notably shifted out of US equities between February and March⁵ amid concerns over the weakening economy, trade tensions and high valuations.

Central bank demand and investor flows have been constructive

Consistent demand from central banks has provided structural support for gold over the past few years. In each of the last three years, central banks have collectively purchased over 1,000 tonnes of gold annually.⁶

These large-scale central bank acquisitions, which came into focus following the onset of the Russia/Ukraine war, have undoubtedly contributed to the upward march of gold.

Chart source: Bloomberg as at 24 April 2025, in USD.

Money managers are also showing heightened enthusiasm: in aggregate, they’ve been net long on gold 65% of the time since January 2020.⁷ This positive positioning underscores growing sentiment in favour of gold.

Gold miners are a beta play for gold exposure

For investors seeking exposure to gold price movements, gold miners may be worth considering.

Historically, gold miners have demonstrated the ability to amplify changes in the price of gold due to their operational linkages. This tendency has been evident in the year to date, with the spot gold price rising approximately  28% (over 100% annualised) and the Global Gold Miners Index delivering a gain of around  57% (over 300% annualised)⁸. This demonstrates the potential for gold miners to experience outsized earnings growth when the gold price rises, which can result in significant returns for shareholders. If the price of gold falls, it’s important to note that this dynamic may reverse.

Looking forward to the second half of 2025, gold miners could boast double-digit earnings and growth expectations, reflecting optimism around sustained demand for gold. For those with a positive outlook on gold, investing in miners could be a tactical way to capitalise on current market dynamics.

Source: Bloomberg as at 24 April 2025, in USD.

Despite the pace of recent gold gains, we believe the longer-term outlook for gold and related assets will be supported if geopolitical instability and economic uncertainties persist, and central banks keep boosting demand.  

As investors navigate challenging times, gold and gold miners may continue to shine brightly.

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¹ Source: LSEG data as at 22 April 2025.

² Source: Bloomberg spot gold price (XAU) hit US$3,000/oz in the morning of Friday 14 March.

³ Source: You asked, we answered: Gold hits $3,000 – What comes next? | Post by Taylor Burnette | Gold Focus blog | World Gold Council

⁴ Source: Bloomberg as at 24 April 2024

⁵ Source: US stock market loses $4 trillion in value as Trump plows ahead on tariffs | Reuters

⁶ Global central bank gold purchases: 2022 = 1080.01 tonnes, 2023 = 1050.81 tonnes, 2024 = 1044.63 tonnes. Source: Bloomberg as at 21 March 2025.

⁷ Source: Bank of America research note as at March 2025.

⁸ Source: Bank of America research note as at March 2025.

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