In the recently published, Q3 2025- Gold Demand Trends by World Gold Council [WGC] presented the Outlook for gold Investment 2025. According to the Outlook, the fate of the US dollar remains key for investment decisions, under headlines such as, debasement and de-dollarisation.
There is some disagreement about how readily these apply; our view is that the reality is more subtle. A weaker dollar during the first nine months of 2025 is largely pinned on hedging activity. US assets may have lost some of their exceptionalism but they remain core to most global portfolios. Hedging will just put the onus on them working a little harder for investors, and a marginal shift into less crowded assets is prudent portfolio management.
Anticipated US policy rate cuts are another key pillar for investors. While the opportunity cost motive remains important, the potential consequences of lower rates add more nuance, potentially reflecting a worsening US economy but also stoking fears of inflation; the by-now familiar theme of stagflation, historically supportive of gold.
Gold ETF demand was the standout sector y-t-d. We think the drivers of this demand remain intact even after tonnage holdings eclipsed their 2020 highs. As a share of general portfolios, gold remains under-allocated and a flood of new investors could easily push holdings through the previous peak given the strategic case to do so remains solid.
But there are tactical risks that could derail further inflows. These include: technical sell signals; a continued easing of tariff tensions; geopolitical resolutions; softening fears of US Fed independence; and a rotation out of gold into ‘cheaper’ assets. Such risks naturally proliferate when prices move this fast and holdings approach previous peaks.
Some further profit-taking in Q4 would not come as a surprise following the mid-October sell-off, although the selling appears to have been focused outside of the gold ETF market, possibly driven by Commodity Trading Advisor (CTA) activity. We remain optimistic on North American and European demand and view the economic and political backdrop as constructive for resumed buying of any dips. Our forecast is raised and our confidence bands narrowed.
With the FOMO bar and coin trade in full swing – helped along by geopolitical concerns – we maintain our positive full-year estimate. Gold’s rapid price rise has not been a deterrent as it has been on occasion historically. On the contrary, retail activity chasing rising prices should be a boon for the sector, particularly following short-term corrections.
This applies broadly across geographies, with China and India seen picking up steam in Q4. Trade tensions and economic pessimism will likely drive Chinese buying, while Indian investors may eschew jewellery in favour of lower margin bar and coin. Anecdotally, softer US bar and coin demand appears to have sharply reversed at the start of Q4.
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