Gold Prices Surge Upward
Gold's correction following its rapid growth is an essential part of any asset's life cycle. After reaching a new record high on April 22, the precious metal settled into a more expansive range of $3240-$3360 per troy ounce. Despite this price reduction, several factors that initially caused gold's rise by 32.8% since Q4 2023 remain active.
Private investors' demand for gold-backed ETFs is one major reason for the surge in gold prices. According to the World Gold Council (WGC), these funds acquired 226.5 tons of gold in the first quarter of 2025, compared to 18.7 tons in Q4 2024, and a net outflow of 113 tons a year ago. This trend continued in April, with Chinese gold ETFs experiencing record inflows of 70 tons, worth approximately $7.4 billion, surpassing the previous monthly record.
Overall, investment demand increased by 60% quarter-on-quarter and 170% year-on-year in Q1 2025, reaching 551.9 tons. The WGC attributes this to "price momentum and uncertainty in trade policies, which encouraged investors to seek out safe-haven assets." Historically, private investors tend to actively acquire assets following significant price rises.
State central banks are another significant factor contributing to gold's growth. "Central banks have been making net purchases for the 16th consecutive year, increasing global reserves by 244 tons in the first quarter amid ongoing global uncertainty," states the WGC. The National Bank of Poland was the largest buyer of gold in 2024 and maintained its leading position in early 2025, adding another 49 tons to its reserves.
Supply side adjustments are another crucial factor affecting gold prices. In Q1 2025, mining decreased by 11% compared to the previous quarter, amounting to 855.7 tons, while secondary production decreased by 4% compared to Q4 2024. However, hedge operations increased the overall gold supply by 1% year-over-year, totaling 1,206 tons in Q1 2025, the highest level for the first quarter since 2016. Though this increase in supply outweighed demand, the total gap between demand and supply was only 104 tons, which could indicate a resurgence of the upward trend.
Many analysts predict gold prices will continue to rise, with Goldman Sachs expecting investors to buy gold at $3,700 per ounce in 2026, while JP Morgan predicts $3,675, and CoinCodex forecasts $4,500. Still, the advisability of gold investments remains uncertain due to factors such as the dollar-ruble exchange rate, global economic growth, and potential decreases in demand.
Finance analysts, inspired by the rising gold prices, anticipate continued growth in the gold market, with Goldman Sachs predicting investors to buy gold at $3,700 per ounce in 2026, JP Morgan predicting $3,675, and CoinCodex forecasting $4,500. Simultaneously, real-estate investors might find investing in gold-backed ETFs an attractive opportunity, considering the record inflows of 70 tons in Chinese gold ETFs alone, worth approximately $7.4 billion, in April 2025.
