Insight

Gold report Q2 2025 : Market performance and macro factors

August 11, 2025
Invesco
Gold

Introduction

In our quarterly Gold Report, we review the performance of the gold price and touch upon other asset classes, as well as explore significant macro factors, including bond yields, the US Dollar and inflation expectations.

Key facts from Q2 2025

  • Gold price return in Q2 5.7%
  • US 10yr-2yr spread widened in Q2 +18 bps
  • Fed’s forecast for core inflation at end of 2025 3.1%
  • US Dollar Index in Q2 -6.7%

Quarterly price performance

Gold followed its stellar Q1 performance by recording a 5.7% gain in Q2, ending the quarter at US$3,303 per ounce. The quarter began with the gold price dragged below US$3,000 as the market weighed up the impact on the economy of new widespread tariffs while some investors may have also been scrambling to finance margin calls on equity positions. However, when the US administration announced on 9 April that it was pausing trade tariffs for 90 days, equities and gold rallied just as sharply as they had fallen, and the gold price then spent the rest of the quarter trading within a relatively narrow range, consolidating around the US$3,300 level. Events that normally would have moved the gold price had little impact, including conflicts first between India and Pakistan and later between Iran and Israel and the US. 

Likewise, gold remained supported even after Chair Powell said the US economy is in good shape and the Fed is in no rush to cut rates, despite mounting pressure from the Trump administration. The latest “dot plot” shows mixed views among Fed officials but with two cuts being the prevailing expectation for the second half of 2025. According to CME FedWatch, however, the futures market is pricing in three cuts by year-end, with the odds having improved from 22% to 46% over the course of the past month. The market does seem aligned with most Fed members in thinking there won’t be a change made to rates at the July meeting. However, gold investors started shifting their focus away from interest rates and the USD (which continued to weaken) and towards the risks associated with the massive US national debt. 

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