Gold has closed out the first half of 2025 as one of the highest performing asset classes. The World Gold Council's mid-year outlook shows the price soared 26% to the end of June, setting 26 all-time highs on top of 40 highs in 2024. But the Council's senior market strategist John Reade says the outlook now depends heavily on US monetary settings. As for the tick up in US CPI during May which could further delay interest rate cuts from the Federal Reserve, Mr Reade says "it's certainly a headwind towards future strong performance for gold. US interest rates remain a really important driver, particularly in the short term of of the US dollar denominated gold price.
"Rates will come lower, though. This inflation peak is probably associated with the tariffs. Those will work their way through the inflation numbers, but more importantly, we're going to get a new Federal Reserve governor at some point in the next 12 months, probably next year unless Donald Trump and his associates can find ways to dismiss Jay Powell for cause.
"President Trump really wants interest rates to be lower, and I think that it's going to be very clear that the next Fed governor will be a dove and rates will come lower. And I think anticipation of that will be one of the biggest factors in the gold market over the balance of this year and probably into next year too."
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