Central bank buying, de-dollarisation and looming US rate cuts are setting the stage for more record price highs.
Gold continues to shine as a safe-haven asset, with central banks, sovereign funds and institutional investors increasingly backing the precious metal as a strategic allocation, according to State Street Investment Management.
State Street Investment Management APAC gold strategist Robin Tsui told Australian Resources & Investment that structural shifts in the global economy, from trade tensions to de-dollarisation, have put gold in a strong position heading into the end of 2025.
“We’ve been seeing many structural changes this year, especially with the gold market,” Tsui said. “In the first half, we saw quite a strong demand into gold ETFs and central banks.
“That’s been helped by the Trump situation, the tariffs, and also the theme of de-dollarisation becoming more important. Many of our clients in Asia are thinking about rotating some of their assets into gold.”
State Street expects the gold price to reach $US3900 per ounce by year-end, supported by US rate cut expectations, geopolitical risks and seasonal demand from Asia.
“Heading into the fourth quarter historically is supposed to be a good performance period for gold prices, with stronger demand from China and India,” Tsui said.
While Bitcoin is often raised as a potential competitor to gold, Tsui said the two assets play very different roles.
“Central banks don’t buy Bitcoin, not as yet, but they’ve been piling into gold,” he said.
“Bitcoin clients do have exposure, but it’s more about chasing alpha rather than diversification. Gold is transparent, liquid and not controlled by any government.”
Australia is also shaping up as a key market for investment products tied to gold, thanks to its role as both a top producer and home to one of the world’s largest retirement fund systems.
“We understand Australia is a huge market in terms of retirement funds,” Tsui said. “That’s why we launched the State Street Gold Fund last year, because we saw rising interest among private banks. A major bank in Australia invested in gold for the first time ever through our fund.”
For investors weighing gold equities against gold-backed ETFs, Tsui suggested a balanced approach.
“Typically, the five per cent benchmark allocation is the range that historically can improve portfolios,” he said. “Mining shares can offer dividends and alpha, but they don’t always track the spot price. If you want diversification that tracks gold one-to-one, ETFs or managed funds are the way to go.”
Looking further ahead, Tsui said strong institutional demand will keep gold supported.
“One of the key differences between now and the last correction in 2013 is that central banks weren’t big buyers back then,” he said. “Now, central banks are absorbing around 30 per cent of new mine production. That level of strategic buying is why we feel comfortable the gold market will continue to be supported.”
With geopolitical uncertainty, monetary easing and central bank demand underpinning the market, State Street sees gold’s long-term role as secure.
“It’s just a matter of time before we see $US4000,” Tsui said. “We haven’t seen a slowdown in demand at all.”
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