With gold rising more than 7 per cent over the past month, it has far surpassed initial year-end projections for the yellow metal's potential.
Not long ago, in February, Goldman Sachs raised its gold price forecast to US$3,100 by the end of 2025, a notable increase from its previous projection of US$2,890.
Following the most recent surge, State Street has now boosted its 2025 gold bull case outlook to a range of US$3,100-US$3,400, up from US$2,900-US$3,100, driven by a strong Q1 price rally and solid ETF inflows.
State Street's head of gold strategy, Aakash Doshi, and his team remain structurally bullish on the gold market over the next 6-9 months, pointing to rebounding investor demand, growing US recession and stagflation risks, persistent geopolitical uncertainty, and continued central bank purchases.
Speaking to InvestorDaily, Global X investment analyst Justin Lin pointed out that investors actually started out the year relatively underweight in gold.
“The volatility we’ve seen since Trump’s inauguration caught much of the market off guard, so it wouldn’t be surprising to see gold gain support as portfolios adjust,” Lin said.
Beyond its traditional role as a risk-hedge and safe-haven asset, Lin highlighted that gold’s strong momentum is attracting speculative traders - a factor that could fuel further price gains for the yellow metal.
Meanwhile, investors globally injected US$12 billion into gold ETFs in the first three months of this year, which Lin explained marks the greatest quarterly inflow since the same period in 2022 - which aligned with Russia’s invasion of Ukraine.
“The bulk of those purchases came from Europe and North America. This time around, though, it’s a different story. Asia, Europe, and North America have all been net buyers—the first time we’ve seen a truly global gold grab like this since Q3 2020. It speaks to just how far-reaching the anticipation around Trump’s incoming policy shift really is,” he said.
Meanwhile, Australian investors funnelled more than $280 million into gold ETFs over the first quarter of this year, the highest since 3Q20.
Global X’s own gold ETF suite - comprising GHLD, GOLD and GXLD - attracted $171 million over the quarter, marking the firm's strongest start to the year since 2020.
Speaking to InvestorDaily, Arian Neiron, managing director of VanEck Asia-Pacific, noted that gold ETFs have played a crucial role in driving the yellow metal’s recent surge.
“The latest data from the World Gold Council shows annual investment in gold reached a four-year high in 2024, with gold ETFs in particular having a sizeable impact, and they are forecasting that central banks and ETF investors are likely to drive that demand further this year,” Neiron explained.
According to the managing director, VanEck is seeing reflected in its own Gold ETF, NUGG, which gained 18.44 per cent in AUD terms over the first quarter, alongside a 223 per cent increase in flows.
Its gold miners ETF, GDX, saw an even sharper rise, surging 34.3 per cent, while net flows in the past quarter alone were more than 200 per cent higher than the total flows for all of 2024.
“The Trump administration's policy-induced uncertainty, combined with rising inflation expectations and diminished consumer confidence have weighed on major stock indices, which had further boosted gold's appeal as an alternative investment and portfolio diversifier,” Neiron highlighted.
But whether this rally is just beginning or nearing its peak remains a classic "wait and see" scenario, according to Lin.
Notably, political uncertainty is largely influencing the trajectory of the gold metal. This includes Trump’s planned sweeping tariff announcements, dubbed “Liberation Day”, set to take place on Wednesday morning local time.
If trade measures turn out to be more restrictive than expected, Lin said he wouldn’t be surprised if gold reaches fresh records as soon as this week.
“With strong momentum already in place, levels like US$3300 or A$5250 are well within reach in the near term,” he said.
“That said, sentiment is already pretty bullish heading into April 2nd [EDT time], which leaves room for a pullback if upcoming tariffs turn out to be less aggressive than expected.”
But for the rally to sustain its momentum, Lin said gold would need “more than just fear or uncertainty”, namely a more concrete downturn in the global economy would likely be necessary.
“In the meantime, expect plenty of price swings as we move from the ‘wait and see’ stage into the ‘now we find out’ moment.”
And while investors continue to show clear signals of de-risking and diversifying away from equities, he added that bonds - which are typically a natural safe haven - have been met with underwhelming interest.
“That’s likely due to their recent volatility, especially at the long end of the curve, thanks to shifting inflation and interest rate expectations. In contrast, gold’s exemplar performance has really helped it establish itself as the go-to asset for macro hedging,” Lin concluded.
