Gold has emerged as the standout performer of 2025, rising 28% year to date and outpacing equities, bonds, currencies, and even Bitcoin. UBS’s Chief Investment Office highlights that spot gold reached $3,337 per ounce on August 18, and the bank now sees prices climbing to $3,500 by December, with further projections of $3,600 in March 2026 and $3,700 by midyear. The rally has been driven by concerns over U.S. fiscal health, questions about the Federal Reserve’s independence, and persistent geopolitical tensions that continue to fuel central bank demand for bullion. UBS noted that while purchases by central banks may not surpass last year’s near-record levels, demand will remain robust, supporting the broader de-dollarization trend. Master the markets with expert trading courses from MJFXM – your gateway to smarter investing.
The investment case for gold has been further strengthened by ETF inflows, which, according to the World Gold Council, marked their strongest first half since 2010. UBS has revised its ETF demand forecast upward to nearly 600 metric tons for 2025, up from 450 previously, driving total global demand to an expected 4,760 metric tons — the highest since 2011. Despite recent fluctuations caused by shifting U.S. trade policies and efforts toward a Russia-Ukraine peace deal, gold’s long-term outlook remains attractive. Inflationary pressures from tariffs and immigration restrictions, coupled with slowing U.S. growth, are keeping the door open for renewed Fed easing. Should rates decline further, the opportunity cost of holding non-yielding gold falls, creating fresh tailwinds for the metal.
Oil markets, however, tell a more cautious story. Brent crude held at $65.90 per barrel in early Wednesday trading, while WTI hovered near $62.40, reflecting muted volatility. Prices had slipped over 1% earlier in the week on optimism surrounding potential peace progress in Ukraine, which could ease sanctions and increase Russian supply. Yet, uncertainty lingers. U.S. President Donald Trump has floated the possibility of air support as part of a deal while arranging future meetings between Putin and Zelenskiy, but mixed signals from Moscow suggest any breakthrough remains fragile. Traders continue to watch developments closely, recognizing that the path toward resolution could dramatically shift global supply dynamics.
At the same time, markets are adjusting to evolving Federal Reserve expectations. A hotter-than-expected Producer Price Index has tempered bets on aggressive rate cuts, lifting the dollar and pushing gold to a three-week low. Investors now await the Fed’s July meeting minutes and Chair Jerome Powell’s remarks at Jackson Hole, both of which could clarify the central bank’s stance. While President Trump continues to pressure Powell for immediate cuts to protect the housing sector, the Fed remains cautious, balancing inflation risks with political scrutiny.
For investors, the picture is complex but clear in one respect: diversification and hedging remain essential. Gold’s resilience underscores its role as a safe haven, while oil and Fed policy continue to add layers of uncertainty that could reshape markets in the months ahead.