
Gold Eyes $3,900 As Uncertainty Fuels Bullish Surge
Already up nearly 30 per cent in 2025 after a 25 per cent gain in 2024, gold is not only outperforming equities but also establishing itself as the ultimate investment haven.
In a world increasingly plagued by economic instability, geopolitical tension, and fiscal recklessness, the yellow metal is once again proving its mettle. The outlook, according to analysts and strategists, is upbeat: gold could surge to a record average of $3,210 this year, with the potential to test highs as lofty as $3,900.
This bullish trajectory is anchored in an evolving macroeconomic landscape. The latest Gold Focus report by Metals Focus, released this week, forecasts a 35 per cent jump in the annual average gold price for 2025.“Looking ahead, we expect gold to break new ground,” said Philip Newman, managing director at Metals Focus.
"Macroeconomic uncertainty and elevated geopolitical risks are likely to sustain investor interest... We forecast a record average price of $3,210 - a level that would finally surpass the real terms peak from 1980.”
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Non-liability-bearing reserve assetDriving this momentum is a potent mix of factors. Central banks are hoarding gold at record levels - net official sector purchases in 2024 reached 1,086 tonnes, driven by a strategic move away from the US dollar. With trust in the greenback eroding due to swelling US debt, renewed trade tensions under President Trump, and fiscal uncertainty, global monetary authorities are turning to the yellow metal as a non-liability-bearing reserve asset. Analysts say that trend is set to continue well into 2025.
Retail and institutional demand also remain firm, despite sky-high prices. While Western markets have seen a slowdown, investor appetite in South and East Asia has more than made up for the slack. Metals Focus notes that physical demand from private investors held up far better than expected, a sign that gold's value proposition remains intact even at elevated price levels.
Still a financial fortressInvestor anxiety over the direction of US trade and monetary policy has added fuel to gold's rise. Expectations of further interest rate cuts by the Federal Reserve later in 2025 have stoked enthusiasm for non-yielding assets like gold. At the same time, speculative positioning - while a source of volatility - has reinforced the upward trend as investors consistently“buy the dips.”
Precious metals analysts argue that with central banks accumulating at historic levels, investors hedging against currency volatility, and governments showing few signs of fiscal restraint, "gold's narrative as a financial fortress seems far from over. For now, the yellow metal shines brighter than ever-offering not just a hedge, but a haven."
A new price floorYet not all voices in the market are equally bullish. Quant Mutual Fund recently warned that gold may have peaked in the short term, suggesting a potential 12 to 15 per cent correction in dollar terms over the next two months. Still, the fund maintains a positive medium to long-term outlook and advises investors to maintain meaningful exposure to precious metals within diversified portfolios.
For a more nuanced perspective, George Milling-Stanley, chief gold strategist at State Street Global Advisors and one of the most respected voices in the gold space, weighed in on the outlook during a recent interview. A pioneer in gold investing and a key architect behind SPDR Gold Shares (GLD), Milling-Stanley believes the rally has deeper roots.
“We still have a lot of geopolitical turbulence, and gold historically performs well during periods of geopolitical turmoil,” he said.“We still don't know where we stand with interest rates. We still have enormous uncertainty on the macroeconomic front.” He emphasises that the metal's rise has not been driven primarily by inflation, contrary to popular belief, but by an overarching climate of unpredictability.
Importantly, Milling-Stanley believes that gold has now established a new price floor.“It looks very much as if we've established a new floor above $3,000 an ounce,” he explained.“Last year, the floor was around $2,000. That is a huge leap.” With this new baseline, gold could consolidate in the $3,000 to $3,500 range before attempting to breach resistance levels near $3,900, he said.
Indeed, this sentiment is echoed in the numbers. The three-year annualised return on gold, as tracked by GLD, now stands at 21.4 per cent -well above its long-term average of around 8 per cent since 1971. For nervous investors navigating today's volatile markets, the allure is not just performance, but protection.
Bar and coin investment has stayed broadly flat globally, but regional shifts are notable. Strong demand in China and India has compensated for softness in the West. Meanwhile, ETFs and institutional vehicles continue to see steady inflows, signaling confidence in gold's long-term value.
Gold's resilience has also found an unexpected ally in trade policy. The reintroduction of tariffs by the US administration and fears of a full-blown trade war have rattled global investors, further undermining confidence in traditional assets and currencies. As these pressures mount, gold's role as an insurance policy becomes ever more relevant.
Even if gold consolidates in the coming months, strategists believe the outlook remains fundamentally strong.“The higher the uncertainty, the higher the upper limit,” said Milling-Stanley.“Our bullish case suggests we could actually take out whatever resistance is available at the $3,500 area, and possibly even trade as high as $3,900.”

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