Gold broke US$3,500 per ounce in April, rising 6 per cent over the period. While the yellow metal pulled back towards the end of the month, it still finished at a strong US$3,300 as investors saw a progressive rotation back into risk assets.
According to the World Gold Council, a significant plunge in the US dollar was a key driver for gold’s performance in April, coupled with, as characteristic of preceding months, spikes in market volatility and geopolitical uncertainty.
Notably, State Street Global Advisors on Friday revealed that bullion might have found a new baseline “floor price” of between US$3,000 and US$3,100.
“There is a strong tactical and strategic case to be made that the gold market has transitioned to a higher price regime north of US$3,000/oz,” State Street’s gold strategy team said in its latest market monitor update.
As such, the wealth giant has updated its base case scenario – at 45 per cent probability – for gold to stay at record levels through the year, between the US$3,100 and US$3,500 mark.
In its bull case scenario, which it assigns at 35 per cent probability, State Street has shifted its forecast to a higher US$3,500–US$3,900 range in 2H25.
“Heightened policy uncertainty surrounding world trade – particularly between the two largest economies (US, China) representing ~45 per cent of global nominal GDP – has only exacerbated bullish sentiment towards the yellow metal,” the strategists said.
In the event that global tariff wars and inflation risks resolve this year, with financial markets forcing the White House’s hand to shift course, the company said its base case sees gold trading between US$2,300 to US$3,100.
“On balance, post-Liberation Day trade policies have enhanced the case for gold investment in 2025 by concurrently filtering through the market uncertainty, FX/rates, US/global economic growth order, equity volatility and liquidity channels.
“However, the feverish pace of Western gold investment demand observed during the first 14 weeks of the year may stabilise in 2Q.”
In State Street’s view, some consolidation could be healthier for the gold market over the medium term.
According to the World Gold Council, even if tariff wars settle, the yellow metal would still have a leg to stand on. This is in spite of the council attributing some 10 to 15 per cent of all gold year-to-date returns to concerns around the trade outlook.
“Even if trade negotiations were to progress and conditions to improve, we would not expect gold to completely reverse its risk-induced bump,” it said.
“For one, gold remains well bid despite some easing of trade tensions and the noteworthy rebound in the US stock market since early April.
“In addition, investors – especially international ones – appear wary of policies on which the Trump administration may concentrate next … and all other policies that may come over the following three and a half years.”
While the rapid rise in gold prices this year may raise concerns about its sustainability, the council believes investment demand will remain strong.
