Edmund Hillary and Tenzing Norgay climbed to the top of world as they huddled together atop Mount Everest. It is often said that it is much easier to reach the summit but very difficult to remain there. Gold found that this applied to its own rapid climb since the start of 2025 to a great extent. Gold had its own Sindoor moment as it literally smashed its way through to over $3500 per ounce on 22 April 2025. This was mainly aided by Trump’s fiat on tariffs, various executive orders disrupting the global financial order, the continuing war in Ukraine, Israel’s Gaza pushback, US-Houthies skirmishes, financial, banking and economic turmoil in the world, weakening USD, the mounting US debt, stock markets decline all over the world and so on. All of which enhanced gold’s safe-haven status reflected in continuing purchase by central banks across the globe, increase in demand for gold ETFs, etc. In the process, gold jumped by over 32% from the beginning of the year. This after reaching $3,000 per ounce just over a month ago on 14 March 2025. Therefore, the yellow metal shot up by $500 per ounce in just 5 weeks or so.
But, alas it was too good to last. A series of events saw gold slide sharply by nearly 12% towards $3,100 per ounce at $3,130 per ounce (intra-day) in mid-May. The reasons were plenty, Trump’s flip-flop on trade tariffs, direct negotiations with China on trade tariffs, his ceasefire with the Houthies, attempts to force a ceasefire in Ukraine, a slight improvement in USD index after its decline below 100, the Dow improving from a low of around 37,000 to over 42,000, bitcoins index recovering from a low of around 76,000 to over 102,000. However, all these indices were below their levels seen at the time of Trump’s entry into the White House. Even Operation Sindoor that saw India in an intense 4-day warfare with Pakistan, both nuclear weapons states, saw gold hover near $3,400 per ounce only to decline once ceasefire was announced on 10th May that saw the yellow metal decline to around $3,130 per ounce by mid-May. Does it mean that gold had lost its mojo? Have the gold bugs retreated? Will gold fall below $3,000 per ounce? Will gold see $3,500 per ounce again? Is it the end of gold’s bull run?
Far from it! In fact, gold recovered smartly from the mid-May low of around $3,130 per ounce to over $3,350 per ounce by 22nd May 2025 on the news first that Moody’s ratings had downgraded US sovereign debt rating down from AAA to AA1 and that Chinese investments were pulling out of US stock markets. It all pointed to a growing shift in US economic outlook and an impetus for gold to shift gears to move ahead once again. However, currently gold is down facing headwinds from economic data that is not amicable to gold. It is trying to stay afloat above $3,300 per ounce mark. It seems to be taking one step at a time and brick by brick consolidating its position as it makes its way forward. In spite of near-term setbacks, gold seems to have more things in its favour than against.
Consider the following: JP Morgan has predicted a sharp rise in gold prices, with an average gold price of $3,675 per ounce by the end of 2025 with a potential surge to $4,000 per ounce by mid-2026. The bank has attributed its bullish outlook to factors like deepening macroeconomic concerns, rising geopolitical instability, and strong demand from Central banks and investors. Then, Goldman Sachs too has predicted gold to scale $3,700 per ounce by end of 2025, up from $3,220 per ounce on 15th May as Central Bank purchases continue unabated. It has predicted a high of $4,000 per ounce by mid-2026 while UBS was more conservative at $3,500 per ounce by end 2025. Moreover, Goldman Sachs further predicted that gold could scale $6,000 per ounce by the end of Trump’s tenure in 2029. Probably, betting on Trump’s ability to create more disruptions in global economic order. Even Bank of America analysts have predicted gold to surge ahead to $4,000 per ounce by the end of 2025, based on global trade induced geopolitical uncertainties in the main as well as concerns over the US government’s fiscal outlook which could propel gold’s next push.
Although the threat of an immediate recession has receded somewhat, according to several financial institutions, the fact remains that tariff uncertainties could trigger off not only the US economy but also the economies worldwide into recession. This could impact all other precious metals barring gold. Many analysts have predicted silver to scale $40 per ounce but threats of a recession have kept silver much below $35 per ounce unable to come out of the $33-34 per ounce region.
Then, platinum that is said to be having one of its better years in recent times, could find its progress halted should recession set in. Palladium does not enter the picture as it continues to fall behind platinum and a recession could push it much further down. The fears of inflation being triggered off by Trump’s tariffs is preventing any interest rate cuts by the US fed. The Fed chief, Jerome Powell, is steadfast on his view that it is not the right time to cut interest rate yet. He is of the opinion that higher tariffs could increase chances of higher inflation. However, because of this view he is on a collision course with President Trump who wants interest rate cuts to be announced – pronto! The sum total of all this is that both Trump and Powell are on opposite sides in a no-holds barred boxing ring. Powell appears to have another Fed Governor in his corner as he concurred with the Fed chief’s view of not lowering interest rates till the inflation scenario was clear.
Elsewhere, platinum came to the forefront briefly as gold and silver faltered. Platinum price surged by to a two-year high as it gained by around 10% in a week recently. This was mainly due supply concerns and the World Platinum Investment council forecasts of a 1-million shortfall in 2025. However, a Johnson Matthey report highlighted near term uncertainty for the PGM market due to higher import tariffs on the global economy. The report further stated that trade conflict had a potential to inflict wider economic damage that in turn impact automotive and industrial demand for PGMs both inside and outside the USA. It could also drag down consumer spending on luxury items such as jewellery.
Meanwhile, closer home, Union Minister of Consumer Affairs, Food and Public Distribution & New and Renewable Energy, Shri Pralhad Joshi chaired the 9th meeting of the Bureau of Indian Standards (BIS), reaffirming the vital role of standardisation in driving India’s economic growth and global competitiveness. Key announcements included: phased rollout of mandatory hallmarking for gold jewellery and artefacts, plans to include gold bullion under mandatory hallmarking and initiatives to standardise silver jewellery. One can hope that this happens at a rapid pace as compared to the earlier experience of hallmarking in gold jewellery.
Alarmingly, just last week (22nd May) the 20-year bond auction conducted by the US treasury was unusually weak. Long term yields fell further the next day as the yield on US 30-year treasury topped 5% just recently (its highest since 2023), the 10-year yield too was around 4.61%. Investors appear to want more as the tax cuts announced by the US government could add to fiscal woes and even add $4 trillion to the $36 trillion US debt. This raises concerns about servicing that debt and repayment of the same on maturity of those bonds. No wonder the bond markets are on the edge. It is being said with growing alarm that bond markets could lead the next global financial meltdown.
A US trade court’s ruling that blocked Trump’s 2 April ‘Liberation Day’ tariffs not only delivered a tight rap on the US administration’s knuckles but, impacted gold as it got embroiled in collateral damage. Gold slumped from a day high of $3,323 per ounce to $3,270 per ounce on 30 May 2025. However, a temporary reprieve by the US Appeals Court, allowing the administration to appeal against the verdict, saw gold end the week around $3,288 per ounce.
Finally, the fact that Trump imposed a 50% tariff on EU after failed trade negotiations and the way he has sought to browbeat Apple into manufacturing its computers in the US by threatening to impose 25% import duty on Apple products made outside (Apple recently announced its decision to make its computers in India) the US clearly means that there could be more disruptions in global markets due to US tariff’s. Further, the USD is weakening and the bond markets jittery, recession in the US and its global impact cannot be set aside easily, though Bitcoins have surged following the establishment of a Bitcoins reserve for the federal government and even removed a barrier for Bitcoins set up by the Biden administration – gold seems equal to the task of staying on top of Bitcoins.
Then, geopolitical tensions show continue without any respite as Ukraine war appears nowhere near a truce as Trump blasted Putin as crazy and that he wanted the whole of Ukraine even as the fighting intensified. Israel continues to pound Gaza with the death count increasing by the day. It seems that Israel wants the whole of Gaza under its control. Moreover, the tension between the two nuclear-armed neighbours simmers below the surface and threatens to blow up anytime. All of which puts gold in the pole position. Will gold surprise everyone and top $4,000 per ounce in a jiffy?
In the end, with Florida announcing that it would accept gold and silver as currency things look very bright for the yellow metal. Will de-dollarisation quicken and end USD sway over financial markets? Will a new order with gold as its focal point emerge? Gold eagerly waits in anticipation.