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Gold Market Commentary

A risk-induced premium that may linger

Dollar dive and vol spike drove gold up Highlights

Gold continued its ascent in April, breaking the US$3,500/oz mark in intra-day
trading during the month. 1 While gold pulled back from its record highs, it still April review
finished strong, above US$3,300/oz and rising by 6% m/m (Table 1, p2). Gold’s A significantly weaker US dollar
return was more modest in developed market currencies and even fell slightly in and overall heightened risk pushed
Swiss francs on the back of local currency strength versus the dollar. gold higher during the month.
In fact, our Gold Return Attribution Model (GRAM) points to the significant
plunge in the US dollar – captured by ‘opportunity cost (FX)’ – as one of the key Looking forward
drivers of gold’s performance in April (Chart 1). Other contributing factors were We expect US policy and structural
a spike in market volatility and geopolitical concerns (‘risk and uncertainty’). The risks to continue driving gold
model also suggests that there was a degree of mean reversion that created a investment. Profit taking could
drag on gold’s performance, as some investors likely took profits following four bring pause but may also
consecutive months of strong returns (‘momentum’). encourage consumers.

Chart 1: A combination of USD weakness, market volatility and rising geopolitical risk helped gold move higher
Key drivers of gold’s return by month*

10

4
Return (%)

-2

-4

-6

-8
May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25
Economic expansion Risk & uncertainty Opportunity cost (FX) Opportunity cost (rates)
Momentum Residual Gold return

*Data to 30 April 2025. Our Gold Return Attribution Model (GRAM) is a multiple regression model of monthly gold price returns, which we group into four key thematic driver categories of
gold’s performance: economic expansion, risk & uncertainty, opportunity cost, and momentum. These themes capture motives behind gold demand; most importantly, investment demand,
which is considered the marginal driver of gold price returns in the short run. The ‘residual’ represents the percentage change in the gold price that is not explained by factors already included.
Results shown here are based on analysis covering a five-year estimation period using monthly data. Alternative estimation periods and data frequencies are available on [Link].
Source: Bloomberg, World Gold Council

1. Based on gold’s spot price (XAU) as of 22 April 2025.

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Table 1: Gold continued its upward run in almost all currencies amidst USD weakness vs. developed market currencies
Gold price and performance in key currencies*
USD (oz) EUR (oz) JPY (g) GBP (oz) CAD (oz) CHF (oz) INR (10g) RMB (g) TRY (oz) AUD (oz)
April price* 3,302 2,915 15,189 2,477 4,556 2,727 93,928 779 127,107 5,158
April return* 6.0% 1.2% 1.1% 2.7% 1.7% -1.0% 5.9% 6.9% 7.5% 3.4%
Y-t-d return* 26.6% 15.7% 15.2% 18.8% 21.4% 15.2% 23.7% 26.4% 37.8% 22.3%
Record high price* 3,434 3,006 15,628 2,575 4,743 2,812 98,228 830 131,387 5,393
Record high date* 22-Apr-25 22-Apr-25 22-Apr-25 22-Apr-25 22-Apr-25 22-Apr-25 22-Apr-25 22-Apr-25 22-Apr-25 22-Apr-25
*As of 30 April 2025. Based on the LBMA Gold Price PM in USD, expressed in local currencies, except for India and China where the MCX Gold Price PM and Shanghai Gold Benchmark PM are
used, respectively.
Source: Bloomberg, World Gold Council

Can gold’s run last? Risk by any other name…is still risk
Investors have grown increasingly concerned over the
Gold is up by nearly 27% y-t-d, significantly outperforming
growth and inflation outlook from the fallout of the ongoing
major asset classes. 2 Not surprisingly, investors are asking
trade war, both in the US and globally (Chart 2). The rise in
what’s behind the move and how sustainable it might be.
uncertainty around trade policy and international relations
Gold has been supported by a combination of: has been supportive of gold as investors typically turn
towards safe-haven assets for downside protection in those
• US trade policy uncertainty and, more generally,
types of environments.
geoeconomic risk
This has been exacerbated by pressure on US Treasuries
• A weakening US dollar
and the dollar, which traditionally function as safe havens.
• Higher inflation expectations combined with lower bond This phenomenon is well documented by the media. 4 In
yields addition, conversations with wealth managers suggest that,
for the first time in a long time, many investors have been
• Continued central bank demand.
seeking to hedge their overexposure to US dollar assets.
Against this backdrop, investment flows via gold ETFs have
Chart 2: Trade policy uncertainty is extremely elevated
significantly ramped up. In Q1, gold ETFs amassed US$21bn
of inflows – the strongest quarter in three years – with an Bloomberg Economic Global Trade Policy Uncertainty Index*
additional US$11bn in April. Collectively, US funds have led
14
the way, but Chinese funds have increased their holdings by Trump 2.0
a whopping 77% y-t-d.
12

Early innings?
10
Does this mean that the gold investment market is becoming
saturated? We don’t believe that’s the case.
Index level

8
Previous gold bull runs have coincided with significant
inflows in gold ETFs. But there seems to be room to grow. 6
For example, gold holdings by funds listed in Western Trump 1.0
markets are 575t (or 15%) below their record high. 3 In 4
addition, Asian gold ETFs, driven by Chinese and Indian
2
investors, have been consistently growing for the past two
years, signalling a structural shift in adoption.
0
Furthermore, COMEX futures net longs, which typically Apr Apr Apr Apr Apr Apr Apr Apr Apr
represent the more speculative end of the investment 2009 2011 2013 2015 2017 2019 2021 2023 2025
spectrum, do not look overextended. They are currently
*As of 30 April 2025.
sitting near 570t – their lowest level in more than a year and Source: Bloomberg, World Gold Council
well below their 2020 high of over 1,200t.

This, of course, would not rule out further profit taking by

some market participants and potential pullbacks in price.

2. Based on the LBMA Gold Price PM as of 30 April 2025. 4. US Treasuries sell off as trade war calls haven status into question, Morningstar, 9 April
3. Collective gold holdings across all listed gold ETFs in North America and Europe 2025.
reached a record high of 3,746t on 6 November 2020; their holdings as of 30 April 2025
are 3,170t.

Gold Market Commentary | April 2025 02

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We estimate that trade concerns have accounted for The Fed has become a little more dovish recently. According
approximately 10% to 15% of gold’s return y-t-d, to the Fedspeak Index, the FOMC is now very much on the
stemming from USD devaluation, heightened geopolitical fence as it balances the need to control inflation with
and market risk, and at least partly from some of the supporting slowing growth (Chart 4).
investment flows we’ve seen in recent weeks. 5
Chart 4: The Fed is sitting on the fence, as it balances
However, even if trade negotiations were to progress and addressing potentially high inflation with slower growth
conditions to improve, we would not expect gold to Fed funds target and Fedspeak Index*
completely reverse its risk-induced bump.
6 28
For one, gold remains well bid despite some easing of trade
tensions and the noteworthy rebound in the US stock market 5 21
since early April. In addition, investors – especially
international ones – appear wary of policies on which the 4 14
Trump administration may concentrate next…and all other

Index level
policies that may come over the following three and a half 3 7

%
years.
2 0
Focusing on the ‘real’ side of real rates
A major concern regarding US trade policies is the potential 1 -7
effect they could have on US and global inflation. Indeed,
0 -14
short-term inflation is expected to rise in the US according to
Dec 2015 Dec 2017 Dec 2019 Dec 2021 Dec 2023
consumers and market measures (Chart 3).
Federal Funds Target Rate - Upper Bound
Generally, high inflation is supportive for gold as investors
seek out real assets for protection amidst falling purchasing Bloomberg Economics Federal Reserve Sentiment
Natural Language Processing Model
power. Inflation, however, is often accompanied by higher
rates that may create a drag on performance. *As of 30 April 2025.
Source: Bloomberg, Federal Reserve, World Gold Council
Chart 3: US inflation projections are on the rise
1- and 2-year USD inflation swap, and University of Michigan At the same time, bond market participants certainly think
1-year inflation expectations* that the Fed will prioritise economic health in this
stagflationary-led dilemma (Chart 5).

6.5 Chart 5: Bond markets are pricing in more rate cuts

Fed funds futures’ curve*
5.5
4.50

4.5
4.25
%

3.5
4.00
2.5
%

3.75
1.5
Sep Oct Nov Dec Jan Feb Mar Apr 3.50
2024 2024 2024 2024 2025 2025 2025 2025

1-year USD inflation swap 3.25

2-year USD inflation swap May Jun Jul Aug Sep Oct Nov Dec
University of Michigan - 1yr inflation expectations 2025 2025 2025 2025 2025 2025 2025 2025
Term
*As of 30 April 2025.
Source: Bloomberg, World Gold Council Fed funds futures - 30 April 2025
Fed funds futures - 1 January 2025
In this instance, there may be a limit to how much interest
rates may rise: *As of 29 April 2025.
Source: Bloomberg, World Gold Council

5. As of 30 April 2025. Estimated by adding contributions from the US dollar, GPR, market
volatility and gold ETF flows from GRAM over the past two months.

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Even if the Fed were to turn more hawkish, which we believe While investment flows are the key driver of large gold price
would only occur in the event of longer-lasting inflation movements, consumers are an important contributor to
effects, gold could remain supported. gold’s performance in the medium and long term. And they
are key to sustaining gold trends. Higher gold prices have
Using GRAM, we have analysed the effect that changes in
been deterring some jewellery buyers and while consumers
inflation and yields can have on gold, holding other variables
can adjust to higher price levels, they still need time to adapt.
constant. The main conclusion is that, in this environment, a
rise in inflation will likely have a more positive effect on gold’s At present, recycling has remained surprisingly muted, but
performance than the potential drag that higher rates may deteriorating economic conditions could change this,
bring (Table 2). bringing additional supply and adding pressure to gold.

Table 2: The positive effect of rising inflation on gold in Central banks have also been an important source of
the current environment may overcome a possible drag demand for the past three years, significantly contributing to
from interest rates gold’s performance. We still expect central bank demand to
Hypothetical effect on gold’s return from changes in inflation remain robust this year, but rapidly rising prices have, in the
and interest rates holding other drivers constant* past, temporarily decelerated purchases.

Change in Change in 2-year breakeven rate

2-year
yield +0% +0.5% +1% +1.5%
In sum…
Gold’s performance so far this year has been remarkable.
+0.0% 0.00 0.82 1.64 2.46
But the speed at which it has occurred has raised concerns
+0.5% -0.30 0.52 1.35 2.17 about its endurance.
+1.0% -0.59 0.23 1.05 1.88
We believe that structural reasons will enable investment
+1.5% -0.89 -0.06 0.76 1.58 demand to continue to thrive:

• Uncertainty surrounding US policies and their effect on

*As of 30 April 2025. Based on the estimation of sensitivities of explanatory variables
included in GRAM, and the hypothetical effect that a change in inflation and yields may the dollar
have, by holding other variables constant. We use 2-year yields and breakevens instead of
10-year ones, which we normally use in GRAM, to account for the more immediate effect • More sensitivity to higher inflation expectations and a
from tariffs. Results shown here are based on analysis covering a five-year estimation
higher likelihood of lower interest rates
period using monthly data.
Source: Bloomberg, World Gold Council
• Lower gold accumulation levels than in previous cycles.

Looking beyond investors That, of course, would not prevent potential pullbacks driven
We have covered multiple reasons why gold investment may by profit taking or signs of advancements in trade
remain strong. However, it is important to consider potential negotiations.
headwinds. Equally, for gold’s bull run to be sustainable for longer,
consumers need to be given time to adapt to higher prices.

Gold Market Commentary | April 2025 04

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World Gold Council Research

We are a membership organisation that champions the role Jeremy De Pessemier, CFA
gold plays as a strategic asset, shaping the future of a Asset Allocation Strategist
responsible and accessible gold supply chain. Our team of Johan Palmberg
experts builds understanding of the use case and Senior Quantitative Analyst

possibilities of gold through trusted research, analysis, Kavita Chacko

Research Head, India
commentary and insights.
Krishan Gopaul
We drive industry progress, shaping policy and setting the Senior Analyst, EMEA
standards for a perpetual and sustainable gold market. Louise Street
Senior Markets Analyst

Marissa Salim
Senior Research Lead, APAC

Ray Jia
Research Head, China

Taylor Burnette
Research Lead, Americas

Juan Carlos Artigas

Global Head of Research

Market Strategy
John Reade
Senior Market Strategist,
Europe and Asia

Joseph Cavatoni
Senior Market Strategist,
Americas

Further information:

Data sets and methodology visit:

[Link]/goldhubContact:
research@[Link]

Gold Market Commentary | April 2025 05

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Gold Market Commentary | Published: May 2025 06