Geopolitical conflicts, inflation concerns, and questions regarding US dollar credibility are driving the world into a new gold cycle. Industry data indicates that global gold demand surged 84% year-on-year in 2025, reaching 2,175 tons. Propelled by this trend, international gold prices hit a historic high of $5,589 in January. Asia has become the core region of this boom. From Indonesia to Singapore, young investors view gold as a tool for wealth preservation, while central banks continue to increase their holdings. For the first time, the proportion of gold in global central bank reserves has exceeded that of US Treasuries. However, as the Federal Reserve shifted to a hawkish stance, gold prices retreated from their highs, and the market began discussing whether the bull market is approaching a turning point.
Over the past year, gold has once again proven its unique status as a global safe-haven asset. Globally, Asia has emerged as one of the strongest regions for gold demand growth. A leading gold retailer in Indonesia became a direct beneficiary of this trend, climbing 115 positions in regional wealth rankings within a year, with year-on-year revenue growth of 135%. A company representative stated that while gold has always been a key tool for intergenerational wealth transfer locally, market demand has shifted significantly from gold jewelry to gold investment since the pandemic. Data shows that in the first quarter of this year, gold bars and investment products accounted for 98% of the company's revenue, while the traditional gold jewelry business accounted for only 2%.
Unlike previous cycles, the main drivers of this gold boom are no longer just middle-aged and elderly investors. Data from a Singaporean digital wealth management platform shows that its precious metals assets under management grew tenfold in 2025. Meanwhile, data from robo-advisory platforms indicates that approximately two-thirds of its gold investors are between the ages of 25 and 44. Industry insiders note that while many assumed gold investors were typically older, the situation is now completely different. Having experienced the shock of the pandemic, the new generation of investors has a deeper understanding of risk. Having witnessed business closures and sharp declines in stock and real estate markets, they are more willing to hold safe-haven assets like gold.
Another significant force driving the long-term rise in gold comes from global central banks. Data shows that in 2025, gold accounted for 27% of global central bank reserve assets, surpassing US Treasuries at 22% for the first time. This marks the first time in the past 20 years that gold has exceeded US Treasuries in central bank reserve compositions. Analysts point out that over the past two or three decades, US Treasuries were viewed as global risk-free assets, but now US fiscal spending is growing rapidly, and its global leadership role is gradually weakening. The People's Bank of China is a typical representative of this trend. As of May this year, it has increased gold reserves for 18 consecutive months. When ordinary investors see central banks continuously buying gold, it further strengthens their confidence in the value of gold.
In addition to macro environmental changes, technological advancements have made gold investment more accessible. Standard gold bars traded on traditional international markets are usually worth millions of US dollars, making them difficult for ordinary investors to access. Nowadays, purchasing gold through mobile applications has become very easy. For young investors, regularly buying gold through mobile accounts is far more convenient than purchasing physical gold bars. This change is driving gold to gradually become a mainstream investment product. Gold is not the only beneficiary. In 2025, silver rose 145%, creating the largest annual gain in history. Palladium rose over 90%, and platinum rose nearly 160%. Analysts point out that due to the high correlation between precious metals, when gold enters an upward cycle, funds often flow further into other precious metal assets. Silver is receiving particular market attention due to its widespread use in the photovoltaic industry.
However, after experiencing historic gains, new questions are emerging in the market. Since the US launched military strikes on Iran in February this year, gold has not continued its traditional performance as a safe-haven asset. Gold prices have retreated about 14% from historic highs and currently stand below $4,500. Bank wealth management executives believe that energy shocks from Middle East conflicts have pushed up inflation expectations, and the market now expects central banks to maintain high interest rates or even tighten policy further. In this environment, the appeal of gold, which generates no interest income, is weakened, while income-generating assets like bonds regain capital favor. Meanwhile, the US dollar remains strong, putting pressure on gold. For holders of Asian currencies such as the Indian Rupee and Philippine Peso, gold prices have actually become more expensive.
Despite intensified short-term volatility, most institutions still believe gold holds long-term allocation value. Regional banks suggest that the proportion of gold in an investment portfolio should be maintained at around 4%. The Chief Investment Officer stated that gold should be viewed as a complement in a diversified investment portfolio, not a substitute. He emphasized that the only free lunch in the investment field is still diversification, and this principle applies to gold as well. For investors, the gold boom may not be fully over. However, as the Federal Reserve shifts back to a hawkish stance and the global economy gradually adapts to the new geopolitical landscape, whether gold can replicate the meteoric rise seen in 2025 is becoming one of the key questions confronting the market.
