A record-breaking first half

Gold’s 26 percent gain in H1 made it one of 2025’s top-performing major assets. The yellow metal benefited from a rare combination of global factors: a declining US dollar — which had its worst start to a year since 1973 — muted Treasury yields, and a sharp uptick in geopolitical tensions, many linked to US trade policies and regional flashpoints.

These factors created fertile ground for strong inflows into exchange-traded funds (ETFs), over-the-counter (OTC) markets, and futures.

Gold ETF holdings surged by 397 metric tons in the first half — the highest since August 2022 — bringing total holdings to 3,616 tonnes and pushing total assets under management to $383 billion, a 41 percent increase from the start of the year.

Central banks, too, continued to buy gold, albeit at a moderated pace compared to the record-setting quarters of 2022 and 2023. Although net purchases have slowed, they remain significantly above the pre-2022 average of 500–600 metric tons annually.

Why investors piled in

According to the WGC’s Gold Return Attribution Model (GRAM), three key drivers contributed to gold’s H1 surge: risk and uncertainty, opportunity cost, and momentum.

Investor demand stemming from heightened geopolitical and financial risks contributed approximately 4 percent of gold’s return, with half of that explained by a measurable increase in the Geopolitical Risk Index.

A further 7 percent of the return was attributed to changes in opportunity cost, primarily due to the weakening dollar and low bond yields, which made non-interest-bearing gold relatively more attractive.

Lastly, momentum effects, including continued ETF inflows and trend-following investment behavior, added another 5 percent, supporting the metal’s climb through positive feedback loops.

Altogether, these macro and market-based dynamics explained around 16 percentage points of gold’s 26 percent performance in the first six months of the year.

The outlook: Three scenarios for H2

While gold’s fundamentals remain supportive, analysts are cautious about expecting a repeat performance in H2. The WGC outlines three macroeconomic paths that could shape gold’s direction in the second half.

In the base case, moderate global growth and inflation settling near 5 percent could keep real yields subdued, especially if the US Federal Reserve cuts rates by 50 basis points in the fourth quarter.

This environment would likely support gold prices modestly, with forecasts pointing to gains of up to 5 percent. Continued interest from ETF and OTC investors could offset softer consumer demand and increased recycling, both of which may act as speed bumps for further upside.

The bull case envisions a sharp rise in gold if economic conditions worsen — either through stagflation or a full-blown recession.

A flight to safety could trigger renewed ETF inflows, central bank diversification away from the dollar, and heavier positioning in COMEX futures. Under this stress-driven rally, gold could surge another 10 to 15 percent in H2, echoing the strong performance seen during previous crises like 2008 and the early pandemic years.

On the flip side, a more stable geopolitical and macroeconomic environment, such as a resolution to major global conflicts or normalization in trade, would dampen demand for gold. In this bear case, stronger yields and renewed investor appetite for risk assets could pull gold down by as much as 12 to 17 percent.

No matter the outcome, gold continues to serve as a resilient portfolio hedge. Its strong showing in the first half of 2025 reaffirmed its utility in volatile markets, particularly as traditional safe havens like US Treasuries struggle to deliver.

Even if jewelry and retail demand sees pressure, structural support could come from institutional players — including reports that Chinese insurers are quietly upping their gold allocations.

For now, gold may consolidate. But should conditions turn, the metal still has plenty of room to move, in either direction.

Silver price, April 1 to July 17, 2025.

Chart via Trading Economics.

At the start of June, the price of silver soared to 14 year highs, opening the month at US$32.99 and rising to US$36.76 by June 9. Ultimately, the metal reached a year-to-date high of US$37.12 on June 17. Although the price has eased slightly from its high, it has remained in the US$36 to US$37 range to the end of the quarter and into July.

Silver supply/demand balance still tight

Various factors impacted silver in the second quarter of the year, but industrial demand was a primary driver in both upward and downward movements. Over the past several years, silver has been increasingly utilized in industrial sectors, particularly in the production of photovoltaics. In fact, according to the Silver Institute’s latest World Silver Survey, released on April 16, demand for the metal reached a record 680.5 million ounces in 2024.

Artificial intelligence, vehicle electrification and grid infrastructure all contributed to demand growth

At the same time, mine supply has failed to keep up, with the institute reporting a 148.9 million ounce production shortfall. This marked the fourth consecutive year of structural deficit in the silver market.

“(We have) flat supply, growing demand — demand that’s nearly 20 percent above supply,’ he said. ‘And our ability to meet those deficits is shrinking because we’re tapping into these aboveground stockpiles that have shrunk by about 800 million ounces in the last four years, which is equivalent to an entire year’s mine supply. So it’s the perfect storm.’

But industrial demand can send the silver price in either direction.

The chaos caused by Trump’s on-again, off-again tariffs has caused some consternation among investors.

While gold and silver have traditionally both been viewed as safe-haven assets, silver’s increasing industrial demand has decoupled it slightly from that aspect. When Trump announced his ‘Liberation Day’ tariffs on April 2, silver was impacted due to fears that a recession could cause demand for the metal to slip.

Although the dip in silver was short-lived, it was one of its steepest falls in recent years.

“If a global recession really starts, silver will most likely nosedive momentarily. In terms of its 2025 performance, silver growth has been largely bolstered by consolidated precious metals group appreciation, additionally beefed up by relative USD weakness.’

Geopolitics and the silver price

Adding to the tailwinds is a growing east-west divide. Due to its usage in industrial components, particularly those related to the military and energy sectors, and its role as a safe haven, silver is being influenced by geopolitics.

June’s price rally came alongside growing speculation that Israel was preparing to attack Iranian nuclear sites. Investors became concerned that war could disrupt international trade and oil movements in the region.

Ultimately, their concerns were proven right, and Israel launched attacks on June 12; the US then bombed key nuclear facilities on June 21. While the escalation is new, the underlying politics have been simmering for years.

Sanctions against Russia have strengthened support among the BRICS nations, which have been working to reduce their reliance on US dollar assets, such as treasuries, and increase trade in their own currencies.

But they may also be working to separate themselves from western commodities markets. In October 2024, Russia floated the idea of creating a precious metals exchange to its BRICS counterparts. If established, it could shake up pricing for commodities like silver, allowing Russia to circumvent sanctions and trade with its bloc partners.

While the exchange is still just an idea, a bifurcated world is not. While the US has targeted most nations with tariffs, it has singled out China. Much of the first half of the year saw the world’s two largest economies escalate import fees with one another, with China even restricting the export of rare earth elements to the US.

Discussions on national security and critical minerals have been at the forefront for the last several years. Still, they have become even more pronounced with the US and China on tense footing.

“Even if that’s going to happen, industrial use value — building infrastructure, building national security, national energy priorities — needs a lot of silver, and there just simply isn’t enough supply out of the ground to meet the demand. That’s long-term demand above the ground. This has been a thing, but right now, because of these geopolitical forces and realignments, silver is going to drop more into that industrial role,” she said.

Silver price forecast for 2025

Overall, the expectation is that without new mine supply and dwindling aboveground stockpiles, silver is likely to remain in deficit for some time. Other factors, like Trump tariffs and geopolitics, aren’t likely to disappear either.

Demand could ease off if a global recession were to materialize, but safe-haven investing could offset declines.

For his part, Krauth thinks the silver price is likely to remain above the US$35 mark, but it could fluctuate and he suggested a rally in the US dollar could push the silver price down. However, he also sees some pressure easing on the recession side of the equation if the US signs tariff deals that would eliminate some uncertainty.

“US$40, let’s say by the end of this year,’ he said, adding, ‘Frankly, I could see something really realistically above that, maybe an additional 10 percent if the scenario plays out right.’

He doesn’t think that’s the end. In the longer term, Krauth sees silver going even higher. He pointed to the current gold-silver ratio, which is around 92:1, compared to an average of 60:1 over the last 50 years.

“So we could go to, who knows, somewhere like maybe 40 or 30 to one in the ratio. That would be tremendous for silver — that could bring silver above US$100. I’m not saying that’s happening tomorrow, but in the next couple of years I would say that’s certainly something that could easily be in the cards,” Krauth said.

Fundamentals and geopolitics aligned for silver in the first half of 2025, and barring a recession, they are likely to provide tailwinds in the second half. Whether the price climbs or continues to find support at US$35 is yet to be seen.