Ray Jia, Head of the China Research Unit at the World Gold Council, in a recent analysis, discusses factors that could slow down or even reverse the long-term upward trajectory of gold prices. Jia looks back at historical trends and suggests that certain events may hinder the continued rise of gold, while others could lead to a sustained downturn.
He stated, “If geopolitical or trade risks diminish, a downward trend for gold becomes likely. The dollar would strengthen, and demand for gold through central bank purchases, ETFs, and retail transactions would weaken.”
Jia outlined three potential scenarios that could lead to a long-term decline in gold:
Reduced demand from central banks
Other assets entering into fierce competition with gold
Weakened consumer enthusiasm for gold
Despite these scenarios, Jia notes that the probability of their occurrence remains low.
Current Gold Market Analysis
Currently, one of the main drivers of gold’s price increase has been the consistent purchasing by central banks and rising geopolitical and trade risks. However, since the beginning of Q2 2025, the upward momentum in gold has moderated.
In Q2 2025, gold saw a 5.5% increase, which, while significant, is much lower than the 19% growth seen in Q1.
Future Outlook and Economic Threats
Jia also pointed to the current global economic conditions, stating, “With increasing national debt, especially in the US, and ongoing competition among major powers, economic and geopolitical risks may continue to apply significant pressure on the gold market.”
He concluded by affirming that despite challenges, gold will continue to play a crucial role as a strategic asset in investors’ portfolios.
Key Takeaways
Declining Central Bank Demand: Reduced gold purchases by central banks may weaken demand and lower gold prices.
Competition from Other Assets: The entry of other assets into competition with gold could put further pressure on its price.
Geopolitical Tensions: A reduction in global tensions could erode gold’s appeal as a safe-haven asset.
Conclusion
Given recent developments, it appears that the gold market may face challenges in the near future that could slow its growth or even cause a decline. Nevertheless, gold’s role as a strategic asset in global markets remains strong.
