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WisdomTree
Gold Monthly
May 2025
Nitesh Shah
Head of Commodities and Macroeconomic Research, WisdomTree Europe
Nitesh Shah is a seasoned financial professional with over 24 years of experience in research and investment strategy. As Head of Commodities & Macroeconomic Research at WisdomTree Europe, he leads market analysis and insights across asset classes, with a focus on commodities and exchange-traded products. Previously, he held roles at Moody’s, HSBC Investment Bank, The Pension Protection Fund, and Decision Economics, building expertise in market analysis and strategy.
Nitesh earned a master’s degree in International Economics and Finance from Brandeis University and a bachelor's in Economics from the London School of Economics. His insights are frequently featured in financial media, and he is a sought-after speaker at industry events. He also hosts the ‘Commodity Exchange’ podcast, where he discusses trends shaping global markets. Passionate about guiding investors, Nitesh provides actionable insights to help them navigate complex financial landscapes.
Gold as the bellwether for trade war sentiment
Gold continues to act as a bellwether for sentiment surrounding the ongoing trade war. Over the past month, it reached a new all-time high as markets priced in worst-case scenarios. Since then, prices have moderated amid emerging signs of de-escalation.
Gold traded in a wide range during the period, rising from $3,200/oz on 14 April 2025, to an all-time intraday high of $3,500/oz on 22 April. This surge was driven by heightened fears of a collapse in global trade following the aggressive “Liberation Day” tariffs imposed by the US administration in early April, and the retaliatory measures taken by other countries.
As of 16 May, gold has retreated back to $3,200/oz, reflecting growing optimism around trade negotiations. While the tariffs announced on 02 April (Liberation Day) were initially imposed broadly, most were paused for 90 days on 09 April—except for those targeting China. China, which faced steeper tariffs, responded with equally severe tariffs on US goods.
On 12 May, markets were surprised when the US and China agreed to a 90-day pause on most of their respective tariffs, significantly easing the effective tariff burden. Risk assets rallied, and gold prices pulled back. Nevertheless, gold remains above where it was a month ago.
Figure 1: Gold price at a new high
Source: WisdomTree, Bloomberg. January 1970 to April 2025. Monthly data. Historical performance is not an indication of future performance and any investments may go down in value.
Gold and dollar
Gold’s surge to the 22 April peak was also supported by US dollar weakness. Since then, the dollar has appreciated, making it harder for gold to sustain those gains.
Figure 2: Gold and dollar
Source: WisdomTree, Bloomberg. 01/01/2025-16/04/2025. Daily data. Historical performance is not an indication of future performance and any investments may go down in value.
Gold and bond markets
In early April, bond prices fell sharply (that is, yields rose), while gold prices climbed. Bonds have yet to recover those losses. Bond yields have also remained volatile—with 10-year Treasury Inflation-Protected Securities (TIPS) ranging from a high of 2.25% on 11 April to a low of 1.19% on 01 May, before rebounding to 2.15% by 13 May. This volatility has reinforced gold’s appeal as an anti-fragile, defensive asset.
On 16 May (after market close), Moody’s Investors Service downgraded US sovereign debt from Aaa to Aa1. While largely anticipated, the downgrade highlights the persistent challenge of managing the US debt trajectory and may trigger additional short-term volatility in bond markets. Gold is likely to benefit from this uncertainty.
Figure 3: Gold and real rates
Source: WisdomTree, Bloomberg. 01/01/2025-16/05/2025. Daily data. Historical performance is not an indication of future performance and any investments may go down in value.
Central bank demand for gold
According to the World Gold Council’s Q1 2025 data, central bank demand remained strong at 244 tonnes. Although this is below Q1 2023 and Q1 2024 levels, it is nearly three times higher than Q1 2022, when demand surged in response to the Russia-Ukraine conflict.
The People’s Bank of China (PBoC) reported its sixth consecutive month of gold purchases, adding 2.2 tonnes to its reserves. Year-to-date, the PBoC has acquired 14.9 tonnes. Although this appears to reflect a slowdown, in value terms (given higher prices), purchases remain robust. Moreover, we suspect the PBoC may be underreporting its purchases, as the World Gold Council's quarterly estimates often exceed the figures reported by central banks to the IMF1 International Financial Statistics.
Figure 4: Central bank demand for gold
Source: World Gold Council, WisdomTree, Q1 2010 - Q1 2025. Historical performance is not an indication of future performance and any investments may go down in value.
Investor sentiment
Interestingly, despite this year’s rally in gold prices, net speculative positioning in gold futures has declined since February.
Figure 5: Net speculative positioning in gold futures
Source: WisdomTree, Bloomberg. 01/01/2021-16/05/2025. Daily data. Historical performance is not an indication of future performance and any investments may go down in value.
Conversely, flows into exchange-traded products (ETPs) have risen notably, suggesting that these vehicles may better reflect investor sentiment toward gold at the moment. In fact, the increase in ETP flows has driven a 170% year-on-year rise in total investment demand to 552 tonnes—its highest since Q1 2022, according to the World Gold Council.
Figure 6: Gold in exchange-traded products
Source: WisdomTree, Bloomberg. 03/01/2022 - 16/05/2025. Daily data. Historical performance is not an indication of future performance and any investments may go down in value.
China demand
Chinese ETPs recorded their highest-ever monthly inflows in April 2025, adding RMB 49 billion (US$6.8 billion). Holdings rose by 65 tonnes to 203 tonnes—both record highs. Wholesale demand was also strong, with 153 tonnes of gold withdrawn from the Shanghai Gold Exchange, a 27% month-over-month and 17% year-over-year increase.
Gold and bitcoin
The risk rally in recent weeks has allowed for an upward correction in the bitcoin to gold ratio. Bitcoin is approaching its all-time high, reached last in December 2024. As digital currency gains greater institutional acceptance, gold will likely face some competition, even though the two assets behave very differently and have a complementary role in portfolios.
Figure 7: Bitcoin to gold ratio
Source: WisdomTree, Bloomberg. 01/09/2022 - 16/05/2025. Daily data. Historical performance is not an indication of future performance and any investments may go down in value.