Key Takeaways
- Gold hit a new all-time high in April 2025, defying a sharp bond sell-off and underscoring its renewed appeal as a safe haven amid rising geopolitical and policy uncertainty.
- With Trump’s aggressive tariff policy and the risk of stagflation unsettling markets, gold prices could climb as investors seek refuge from both recession and inflation threats.
- In a bull or policy-debasement scenario like the “Mar-A-Logo Accord,” gold could soar.
Gold reached a fresh all-time high in April, continuing its strong upward trajectory over the past six months. This rally has been supported by U.S. dollar depreciation and for some time falling bond yields, marking a shift from the headwinds these factors posed for previous years. However, a sharp bond sell-off at the time of writing (11/04/2025) has failed to drag gold down with it – with gold extending gains to the highest on record.
Gold may continue rising as erratic U.S. trade policy continues to unnerve investors, driving them to the safe haven of gold. Trump’s so-called ‘Liberation Day’ tariffs will see the imposition of near-unprecedented tariffs on most of the U.S.'s trading partners. Gold initially pulled back on the news on 2nd April 2025. This is typical during episodes of financial market stress: when equities and other risk assets decline, gold is often sold initially as investors seek liquidity. Margin calls on equity futures and other risk management protocols frequently lead to such short-term selling. However, gold prices generally rebound quickly after this initial pressure. We are currently witnessing a robust rebound.
We enter this forecasting period amid unusually high levels of uncertainty. It is important to note that the consensus forecasts used here were made prior to the recent bout of market turmoil. Market-based indicators now point to rising risks of both recession and inflation—a stagflation scenario that could significantly boost gold prices, as outlined in our bull scenario.
Gold Attribution
Gold’s ascent in recent months has been difficult to fully capture with our model , but in retrospect, the shock delivered in April provides strong justification in terms of a major policy misstep.
Central Banks
Central banks continue to buy gold at a strong pace. Every year since 2022, central bank buying has been more than double the average rate in the decade prior to 2022. Given the scale and potential importance of central bank buying many ask why central bank purchasing is not part of our model framework. The answer lies in data availability. Our models use monthly data frequency. There is no reliable central bank gold purchasing data available on a monthly basis. The numbers that central banks report to the International Monetary Fund International Financial Statistics on a monthly basis, barely captures a quarter of their actual purchases.
However, using the quarterly data produced by Metals Focus for the World Gold Council, we do have some better information. Unfortunately, the time series is much shorter than what we use in our model and therefore does not capture many economic cycles. So, we choose not to use the data for our main model, but for the purpose of illustration we use this data to demonstrate that central banks do indeed have a significant impact on gold prices.
Gold Price Forecasts
We are writing at a period of heightened uncertainty. As usual we present a gold forecast using a consensus view on dollar, inflation and nominal Treasury yields. Unfortunately, we do not have a consensus forecast cut after Liberation Day, so this forecast may be quite conservative.
Consensus
Consensus views were for inflation to remain stubbornly above the Fed’s target even before the tariff shock came into effect. Consensus at the rime expected very little movement in bond yields and some dollar depreciation. Presenting a conservative view, we reduce speculative positioning to 200,000. This conservative view would take gold prices to $3,610/oz.
Bull
Given the events at the start of April, we could be migrating closer to a Bull scenario, with large upside risk to inflation, dollar depreciation and potential for bond yield compression (depending on the reaction function of the Fed). We certainly think that speculative demand for gold should remain high with rising risks of recession and inflation. In this scenario, gold prices could reach $4,210/oz. It took 14 years for gold to rise from $1000/oz to $2,000/ oz. And just over a year to get from $2,000/oz to $3,000/oz. It does not feel like a stretch of the imagination to see a further $1000/oz added to today’s price to get u to over $4,000/oz.
Bear
In a bear case scenario, where inflation collapses to target (2.0%), bond yields rise to 6.% and the dollar appreciates, gold prices could fall to $2,700/oz. But that will still be above the level we started in 2025.
IMPORTANT INFORMATION
There are risks associated with investing, including the possible loss of principal. Past performance is not indicative of future results.
This material contains the opinions of the authors, which are subject to change, and should not be considered or interpreted as a recommendation to participate in any particular trading strategy or deemed to be an offer or sale of any investment product, and it should not be relied on as such. There is no guarantee that any strategies discussed will work under all market conditions. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This material should not be relied upon as research or investment advice regarding any security in particular. The user of this information assumes the entire risk of any use made of the information provided herein. Unless expressly stated otherwise, the opinions, interpretations or findings expressed herein do not necessarily represent the views of WisdomTree or any of its affiliates.
Nitesh Shah is an employee of WisdomTree UK Limited, a European subsidiary of WisdomTree Asset Management Inc.’s parent company, WisdomTree, Inc.
WisdomTree Funds are distributed by Foreside Fund Services, LLC.
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