Gold Holds Key Support in Record Year for Precious Metals
26 June 2025
Gold prices held above key support this week, after a brief but notable sell-off driven by market perceptions that the recent hostilities in the Middle East will not meaningfully escalate.
Last trading at USD $3,326 and AUD $5,082 per troy ounce (oz), gold is on track to deliver one of its strongest financial year gains on record, with the price up by 42% (in USD terms) and 45% (in AUD terms) since 30th June 2024.
Silver is also on track to record one of its strongest years, last trading at USD $36.83oz and AUD $56.27oz, with silver rallying by 25% (in USD terms) and 28% (in AUD terms) since the end of the last financial year.
Despite the strong gains over the past twelve months, and the various catalysts driving precious metal demand, there seems little sign of euphoria in precious metal markets, even if they have very much become a front of mind asset class for investors worldwide.
This bodes very well for the outlook for precious metals in the coming financial year and beyond, as investors are not notably overweight in their allocations to precious metals.
For evidence of this, consider that:
The gold to silver ratio (GSR) has risen over the past year and is currently sitting at almost 90. It was 80 at the end of June 2024. At the peak of a precious metal bull market, this market will likely be much lower.
ETF gold holdings, while building holdings in recent months, represent a much smaller share (less than 2%) of total ETF assets in the US. This number was closer to 8% back in 2011.
Managed money long positioning (MMLP) in the futures market, which is a good barometer for the bullishness of short-term traders, is lower than it was in June 2024. MMLP has also fallen by more than 30% since February of this year.
Robust Demand Seen at ABC Bullion
While gold prices corrected across the last five trading days as a whole, and indeed have been oscillating in a trading range for most of the past two months, demand for bars and coins remains robust.
We continue to see this daily at ABC Bullion, with strong buying seen across our online channels, as well as in our stores nationwide and in phone-based trading.
Clients looking to allocate to gold, silver (and increasingly platinum) for the first time continue to open trading accounts at extremely healthy levels, while support for our ABC Bullion Gold Saver program also continues to flourish.
This has been exceptionally pleasing to see, with more and more Australian’s turning to precious metals as a trusted store of wealth in these uncertain times.
Market Commentary Supports the Case for Precious Metals
In other precious metal related news this week, we have seen:
News that the Shanghai Gold Exchange would list gold contracts in Hong Kong, further opening the Chinese gold market (with China both the largest consumer and producer of the precious metal) to the world.
Excellent analysis on the case for gold in a portfolio from Alex Shahidi, Managing Partner and Co-CIO at Evoke Advisors. In a Forbes article, Shahidi touched on the case for gold in a portfolio, noting that ; “Gold’s impressive performance in recent years has captured headlines, but its true story stretches much further back. Since 1971, when the U.S. came off the gold standard, the precious metal has delivered strong, competitive returns, nearly matching global equities over the long term, with annualized returns of 8.4% compared to 9.2% for global stocks.” Shahidi went on to note that not only has gold outperformed equities in the last twenty five years, as well as its qualities as an inflation hedge, portfolio diversifier, safe haven and source of liquidity, with a summary of his views on gold noting that; “While not a conventional holding for all investors, gold’s unique attributes and proven track record make it worth considering as part of a well-diversified investment portfolio.”
OMFIF also released a report on central bank gold demand, which noted that the precious metal is finding more favour relative to the US dollar amongst reserve asset managers. Specifically, their report noted that; “Gold is shining brightest as a diversifier. A dedicated ‘in-focus’ section reveals the precious metal is the most demanded asset class for central banks, with 32% of central banks expecting to increase their holdings in the short term". These findings very much align with recent World Gold Council surveys on the intentions of central banks as it relates to the gold market.
Aberdeen wrote an interesting piece on gold, even if their price outlook wasn’t necessarily bullish relative to current levels. In particular they noted that; “Central banks are buying to diversify their foreign exchange reserves away from US dollars and treasuries, which can become illiquid in the event of tariffs or sanctions, and instead purchase more gold.
ETF investors have been selling gold based on the historical relationship between real yields and gold prices. Since real yields have been rising, these investors have expected gold prices to fall. Now that real yields are falling, ETF investors have started to buy more gold. Central banks have continued to buy, with 2024 marking the third consecutive year they purchased more than 1,000 tons.
Having expected gold to reach $2,800 by the year-end of 2024 and $3,000 in the first half of 2025, we now see the potential for gold prices to reach $3,300 by the year-end of 2025."
Finally, Ross Norman of Sharps Pixley wrote a short market update on recent moves in the precious metal market, with a particular focus on geopolitical developments. Norman noted; “Gold market observers and commentators must surely be accustomed to the perverse nature of the gold price action. In our view neither the fundamental data nor the traditional drivers seem to adequately explain nor account for its unusual price behaviour for the last 18 months or so. The recent bunker buster bombing of Iranian nuclear facilities by B2 bombers on Sunday morning (conveniently when markets were closed), risking escalation to a nuclear war has seen gold prices fall by 2%. So much for a safe-haven. What to make of this?
Firstly, there is something a little odd about this 48 hour “war” … I am left with a sense that we have just been treated to some geopolitical theatre. Cynic that I am. Trump needed to look tough (backing down was becoming predictable to the point of comical) … Israel needed appeasement and an endorsement from its big brother … they warn Iran in advance of bombing … nasty material moved in advance (allegedly) … bombs drop … Iran retaliates on a bomb-for-bomb basis with attack on US base in Qatar (which had been freshly evacuated) … Iran gets a hug from China/Russia ... peace declared even before the dust has settled … everyone is a winner ... Trump has saved us from Middle East nuclear armageddon ... Tehran Times declares a significant victory, honour restored … US media delighted … oil continues to flow … the rest of us … non-plussed"
Big Picture Supports Bullion
Norman’s summary of the price action in metals (and other markets) in the past week hits the mark.
It also serves as a valuable reminder to focus on the big picture as it relates to gold, rather than short-term drivers and dynamics, especially with a new financial year approaching.
That big picture involves debt and deficit levels that can’t be meaningfully or easily addressed. It involves overvaluation (if history is any guide) in risk assets. It includes excessive speculation in new assets like cryptocurrencies.
Finally, that big picture involves a continued deterioration in the real economic conditions that many investors and households are facing, and an evolving recalibration of monetary affairs at a nation state level.
These factors are all supportive of higher gold demand, and higher gold prices.
Jordan Eliseo
General Manager, ABC Bullion Australia
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