Why Gold Remains a Smart Investment in 2025

2025 has been anything but stable. Reciprocal tariffs have caused tremors in global trade, and investors have turned to the yellow metal as a reliable haven. The US–China imbroglio goes on and on, and it has supercharged gold demand, especially after President Trump imposed a steep 125% duty on Chinese imports. Though we've had a 90-day pause that's allowing some breathing room for traders, the gold market is gunning to go higher. Yesterday, it closed at an all-time high of $1,292.60 per ounce.

Central Banks and Institutional Confidence

Gold has consistently been attracting central bank buying from across the world. In recent years, their annual purchases have exceeded an eye-popping 1,000 tonnes. And they haven't slowed down this year. Take none other than the People's Bank of China, for example. It has marked another five straight months of buying gold. Heavy amounts of it. Check out the inflow numbers at the Gold ETFs where the Chinese go to buy their gold.

Economic Worries and Rate Cuts

Stagflation in the US, an uncomfortable mix of high inflation and low growth, has many people worried these days. Gold has generally done very well historically when we’ve had this kind of economic backdrop. The overall expectation is that the Fed is going to cut rates two more times this year, which is dollar-negative and gold-positive. In fact, gold in 2024 has done the opposite of what it was supposed to do: go down when the stock market is going up and the dollar is doing well. Instead, it has gone up.

Volatility, Debt, and Safe Haven Appeal

So far in 2025, the stock market has had a hard time, and investors are pushing toward stable assets as equity volatility increases. The US national debt now exceeds 36 trillion dollars (INR 2,995 lakh crore), which only makes gold all the more appealing (as a hedge, at least). And it’s not just the US national debt; a range of geopolitical risks from Europe to the Middle East has made gold attractive for hedging. Today, gold isn't just a hedge; it's the core of many diversified portfolios.

Gold Forecasts Remain Bullish

International banks are steadily adjusting their forecasts for the price of gold, and not in a downward direction.  They began the year forecasting a starting price of $2,650. Then things got interesting. In a matter of days, they touched $3,200, and prices have found support at just under $3,000. Forecasts for the short term range two benchmarks apart: J.P. Morgan's modest $3,000 gold price to Deutsche Bank's far loftier $3,700 price. 

And forecasts have gotten even more interesting. At the top of the list, projections have reached $8,000. In what seems a remarkable communique, Swiss Asia Capital, which has long forecast gold appreciation, is now more than doubling its already high figure to call for $8,000 gold. Insurance isn’t cheap, but in this age of global instability, buying it may be essential.