Monthly Market Recap: February 2025

Overview

February 2025 marked a significant period for the gold market, with prices reaching unprecedented levels. The metal’s performance was influenced by a confluence of factors, including geopolitical tensions, economic policies, and shifts in investor sentiment.

Price Performance

Gold prices experienced a remarkable surge in February. The metal reached a record high of $2,956.15 per ounce on 24 February, reflecting a 42% return over the past year.  This surge underscores gold’s role as a safe-haven asset amid global uncertainties.

Key Drivers

1. Geopolitical Tensions and Tariff Policies: Concerns over U.S. President Donald Trump’s proposed tariffs, particularly on precious metals, have heightened economic uncertainties. These policies have driven investors toward gold as a protective measure against potential market volatility. 

2. Central Bank Purchases: Central banks, notably those of China and India, have continued to bolster their gold reserves. This sustained demand has provided robust support to gold prices. 

3. Currency Fluctuations: A weakening U.S. dollar has made gold more affordable for holders of other currencies, thereby increasing its appeal. The U.S. dollar index touched its lowest level since December 2024, further enhancing gold’s attractiveness. 

Market Dynamics

• Exchange-Traded Funds (ETFs): Holdings in gold-backed ETFs have risen, with the SPDR Gold Trust reporting its highest holdings since August 2023. 

• Physical Demand: In India, a key gold-consuming nation, demand improved as prices retreated from all-time highs. However, overall consumption remained lower than usual, with many buyers exercising caution. 

• Futures Market: The gold market has seen a significant rise in COMEX gold inventories, along with a widening of the spread between futures and spot prices, sparked by tariff uncertainty. 

Comparative Asset Performance

While gold’s ascent has been impressive, other assets have also shown notable performances. Bitcoin, for instance, has surged by 761% since mid-2020, and the S&P 500 has delivered a 98.7% return over the same period. Nonetheless, gold’s consistent rise underscores its enduring appeal as a hedge against economic instability. 

Outlook

Analysts project continued momentum for gold, with some forecasts predicting prices could reach $3,500 an ounce if investment demand rises.  However, the market remains sensitive to developments in U.S. trade policies, currency fluctuations, and central bank activities. Investors are advised to monitor these factors closely as they navigate the evolving landscape.  

Conclusion

February 2025 has been a landmark month for gold, characterised by record highs and reinforced by its status as a safe-haven asset. As global economic uncertainties persist, gold’s role in investment portfolios is likely to remain significant.