Gold seems to have lost its momentum during the second quarter of 2025 as investors remained cautious about the yellow metal’s movements.
The World Gold Council (WGC) is set to release its second-quarter gold demand trends report next week, with expectations of a significant slowdown in price appreciation.
After a robust first quarter, gold prices rose by just under 6% in Q2, considerably less than the preceding period.
This deceleration appears to be largely attributable to a loss of momentum in investment demand, a key driver in Q1.
Loss in investment demand
Barbara Lambrecht, a commodity analyst at Commerzbank AG, noted:
This is at least what developments in ETF inflows suggest.
Exchange-traded funds (ETFs) recorded inflows of 170 tons, a notable 50-ton decrease compared to the first quarter.
While demand saw some pickup in Asia, it specifically slowed in the US and Europe.
Lambrecht further elaborated on the composition of investment demand, stating, “Although demand for coins and bars is also included in investment demand and was even higher than ETF demand in the first quarter, the momentum here is significantly lower, meaning that the setback in ETF demand is likely to be cushioned but not offset.”
The upcoming WGC report will also shed light on central bank gold purchases, which are only partially reported in advance and have historically been higher than official figures submitted to the IMF.
Fundamentally, the trends in investment demand indicate a potential peak for gold prices in the short term.
This sentiment is reinforced by the expectation that no interest rate cut will occur in the US during Wednesday’s FOMC meeting.
Gold sheds weekly gains
Gold prices dropped sharply over the past two days, erasing the gains accumulated earlier in the week.
Gold’s price is currently just under $3,350 per troy ounce this morning. The easing of the trade conflict is creating headwinds for the precious metal.
The recent trade agreement between the US and Japan may serve as a model for a similar agreement between the US and the EU.
“The resulting optimism led to an increase in risk appetite in financial markets, which was reflected in rising stock markets,” Carsten Fritsch, commodity analyst at Commerzbank, said in a report.
In such an environment, gold is less in demand as a safe haven.
Gold ETFs tracked by Bloomberg saw 20 tons of inflows in the first four trading days of the week, primarily early in the week when gold prices rose sharply.
Price revisions for silver and platinum
While Commerzbank has left our gold price forecast unchanged, the German bank has revised its forecasts for silver, platinum, and palladium upward.
The price of silver is likely to reach $39 per ounce by the end of this year compared with Commerzbank’s earlier forecast of $37 an ounce.
Platinum prices are now expected to hit $1,350 an ounce compared to $1,250 an ounce earlier.
Palladium prices have also been revised upwards by $100 an ounce to $1,200 per ounce.
“We therefore consider the majority of the recent price increase for the three precious metals to be sustainable, as it has reduced the previously significant undervaluation relative to gold,” Fritsch said.
At 86, the gold/silver ratio is currently just above its historical average. The same can be said about the price ratio between gold and platinum.
Fritsch added:
From now on, silver and platinum prices are likely to move largely in line with the price of gold.
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