Gold has long stood as a beacon of stability in turbulent times. As 2025 unfolds, the precious metal finds itself at the crossroads of diplomacy, economic policy, and global risk. With ceasefire negotiations between Russia and the United States gaining traction, and central banks recalibrating their strategies, investors are asking: what lies ahead for gold?
Ceasefire talks: A turning point or temporary calm?
As geopolitical tensions continue to shape global financial markets, US President Donald Trump’s renewed diplomatic push to end the Russia-Ukraine war has sparked intense speculation about its impact on safe-haven assets. Talks aimed at ending the prolonged Russia–Ukraine conflict have already begun to influence gold prices. After peaking at $3400/oz, gold saw a modest correction as ceasefire discussions gained momentum
With Trump’s recent summit with Russian President Vladimir Putin in Alaska and subsequent meetings with Ukrainian President Zelenskyy and European leaders in Washington, investors are closely watching how these developments could reshape the trajectory of precious metals.
Impact on bullion
Historically, gold and silver have served as safe-haven assets during periods of geopolitical instability. The prolonged Russia-Ukraine conflict has been a major driver of elevated gold prices over the past three years.
If Trump’s ceasefire initiative succeeds, the immediate effect could be a reduction in geopolitical risk premium. Gold prices are currently carrying a risk premium due to geopolitical tensions. When geopolitical tensions ease, this premium could erode, prompting investors to shift capital from safe-haven assets to riskier equities and bonds.
However, the situation remains fluid. Any derailment of peace talks—such as renewed hostilities or drone attacks—could reignite safe-haven demand and push prices higher again. A prolonged conflict would likely fuel further safe-haven demand, potentially pushing prices towards new highs.
In such a scenario, central banks—especially in emerging markets—may accelerate gold purchases to hedge against currency volatility and inflation. Retail investors, too, would likely increase allocations to precious metals, reinforcing the bullish momentum.
Central banks have played a pivotal role in supporting gold prices. A recent World Gold Council survey found that 95% of central banks expect to increase their gold reserves over the next year. This sustained demand underscores gold’s enduring status as a hedge against economic and political uncertainty.
Federal reserve policy: Rate cuts and inflation risks
The Federal Reserve’s evolving stance on interest rates is another critical factor. Fed Chair Jerome Powell recently signalled potential rate cuts in September, citing economic slowdown and elevated inflation. Markets are pricing in two cuts before year-end, which could support gold by lowering real yields.
Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors.
However, inflation remains a wildcard. If price pressures persist, the Fed may hesitate to ease aggressively, capping gold’s upside. Analysts warn that while monetary policy supports gold, dollar strength could act as a headwind, especially for international buyers.
Trump’s tariffs: Fuelling volatility and safe-haven demand
President Trump’s unpredictable tariff policies have added another layer of complexity. Yet, broader uncertainty around future tariffs—especially on China—continues to drive safe-haven flows.
Gold has historically benefited from trade tensions. It has risen more than 22 percent since 20th January when Donald Trump was sworn in as US president.
Investors view gold as a hedge against policy-induced market volatility, currency instability, and inflationary pressures. Institutional allocations to gold ETFs have surged, reflecting diminished trust in dollar assets and growing demand for portfolio insurance
As Trump’s trade agenda unfolds, gold is likely to remain a beneficiary of investor caution.
Geopolitical uncertainty: A persistent tailwind
Beyond Russia and tariffs, global geopolitical risks continue to support gold. Conflicts in the Middle East, tensions in the South China Sea, and political instability in Latin America have all contributed to elevated market anxiety.
The World Bank attributes gold’s recent strength to heightened geopolitical uncertainty and robust central bank buying. Central banks from emerging markets have increased gold reserves as part of a broader “de-dollarisation” strategy, seeking to diversify away from US assets.
This trend is expected to persist, with central bank purchases projected to reach 1,000 tonnes in 2025. Such strategic accumulation reinforces gold’s role as a financial anchor in uncertain times.
Global demand and supply: A mixed outlook
According to the World Gold Council, global gold demand rose to 1,249 tonnes in Q2 2025, driven by investment inflows and ETF buying. Bar and coin investment hit its strongest first-half level since 2013, while central banks added 166 tonnes to reserves. However, jewellery demand has weakened due to high prices, with volumes retreating to near-pandemic levels. Technology demand remains stable, supported by AI-related applications.
Global gold supply is projected to increase by 1% in 2025, reaching a record 3,694 tonnes. This growth is fueled by new mining projects in Mexico, Canada, and Ghana. Recycling activity remains steady, though constrained by low near-market stock levels and bullish price expectations.
Despite rising supply, demand from institutional investors and central banks continues to outpace consumption in other sectors, maintaining upward pressure on prices.
A delicate balance ahead
Gold’s future hinges on a delicate interplay of diplomacy, policy, and market sentiment. While peace talks between Russia and the US offer a potential path to price moderation, lingering geopolitical risks and economic uncertainty provide strong support for continued demand.
The Federal Reserve’s rate decisions, Trump’s tariff strategies, and central bank buying will shape gold’s trajectory in the coming months. Investors should prepare for volatility but recognize gold’s enduring appeal as a hedge and store of value.
Whether prices consolidate or surge anew, gold remains a vital component of diversified portfolios—especially in a world where certainty is increasingly elusive.
