Hua Er Jie Jian Wen·2025-07-01 12:20Core Viewpoint - Gold prices have seen a significant pullback after reaching a historical high of $3,500 per ounce on April 22, 2025, with geopolitical factors and central bank purchases continuing to support gold, but prices may be nearing a peak due to weakening physical demand, increased supply, and a slower-than-expected rate cut by the Federal Reserve [1][6][12]. Group 1: Supply and Demand Dynamics - Total gold supply is projected to increase from 4,950 tonnes in 2023 to 5,190 tonnes in 2025, driven by mine production and old gold scrap recovery [2]. - Jewelry demand, which constitutes about half of global gold consumption, is expected to decline significantly, with a 21% year-on-year drop in Q1 2025 to 380.3 tonnes [21]. - Investment demand remains strong, with gold ETFs seeing a net increase of 7.94 million ounces in 2023, reaching 90.79 million ounces [14]. Group 2: Geopolitical and Economic Factors - Geopolitical risks have historically supported gold prices, but the market's response may have reached saturation, as evidenced by the failure to surpass the April high following tensions with Iran [6]. - The Federal Reserve's anticipated rate cuts are expected to be less aggressive than previously thought, which could negatively impact gold prices [12]. - Global trade growth is projected to slow, with only a 1.8% increase expected in 2025, which typically supports gold prices [9]. Group 3: Central Bank Purchases and Future Projections - Central bank demand for gold remains robust, with purchases expected to total 955 tonnes in 2025, although this is lower than previous years [28]. - HSBC has raised its average gold price forecast for 2025 to $3,215 per ounce, with a trading range of $3,100 to $3,600 per ounce [2]. - The forecast for gold prices in 2026 is set at $3,125 per ounce, indicating a potential decline in price momentum [2].