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Will gold in 2025 remain a hedge or turn policy-driven?
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The gold price is struggling to hold above $3,300, raising the question of whether bullion still works as a traditional hedge or has become primarily a policy-driven asset. While the Federal Reserve’s higher-for-longer stance and a firm US dollar are capping upside momentum, steady central bank purchases led by China are providing a structural floor. Geopolitical risks and tariff concerns that once fuelled safe-haven demand appear to have less impact, suggesting that gold’s identity may be shifting.
A 360 Trading Experience – Key Take Aaways
- Gold trades near $3,318 after a notable downturn, with a death cross formation looming.
- The Fed’s cautious stance and persistent inflation risks keep the US dollar strong, limiting safe-haven appeal.
- Odds of a September Fed rate cut are 82.9%, down from 100% last week, reflecting tempered easing expectations.
- China added 60,000 oz in July, marking its ninth consecutive month of gold buying.
- Central banks collectively purchased 415 tonnes in H1 2025, down 21% year-on-year but still historically strong.
- Silver diverges from gold, with high prices discouraging coin sales but encouraging ETF inflows.
Fed policy exerts pressure on gold.
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The primary driver for gold in 2025 has been the Federal Reserve’s stance. Markets initially priced in two rate cuts this year, with the first expected in September, but stronger US data and sticky inflation have trimmed those expectations.
The CME FedWatch Tool shows an 82.9% probability of a September cut, down from 100% a week earlier.
Take Control of your Trading – Gold Safe haven appeal weakens
Gold’s reaction to geopolitical events has been subdued. Despite successful talks between US, EU, and Ukrainian leaders and discussions of a potential Putin-Zelenskiy meeting, gold has not rallied meaningfully. Similarly, President Trump’s decision to rule out ground troops in Ukraine – while suggesting possible air support – had little effect.
In previous years, such developments might have triggered a stronger bid for bullion. Now, with the threat of a trade war dissipating and tariffs largely removed from the equation, gold’s role as a safe haven appears diminished. Investors are watching the Fed more closely than they are global flashpoints.
Gold price technical analysis
At the time of writing, gold is hovering around the $3,318 level after a notable downturn, with a death cross formation on the cards. This suggests the potential for a further downturn. However, the volume bars show dominant buy pressure, hinting at a possible upmove.
- Bearish scenario: A confirmed death cross and break below $3,248 would signal a deeper trend change, reinforcing the Fed-driven bearish bias.
- Neutral scenario: Holding within the $3,282–$3,311 range would keep gold range-bound, awaiting Powell’s guidance and future inflation data.
- Bullish scenario: A dovish Fed shift or weakening dollar could trigger a rebound, supported by ongoing central bank buying.
For traders, gold’s technical setup highlights the $3,248–$3,400 zone as critical for near-term strategies. Short-term signals favour caution until Powell’s comments clarify the Fed’s direction.
For portfolio managers, gold is showing signs of an identity shift. Its safe-haven function is fading, with Fed policy cycles and central bank strategies increasingly dictating price action. While silver may offer more dynamic investor-driven opportunities, gold’s strategic role in central bank reserves ensures its long-term relevance.
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