What Is the Current Gold Price Forecast by CommBank?
CommBank's mining expert Vivek Dhar has released a bold forecast for gold, predicting prices could reach US$3,750/oz by the end of 2025, despite recent market volatility. This projection comes as gold continues its remarkable ascent in 2025, fueled by several macroeconomic factors that have reshaped the traditional safe-haven landscape.
"We're witnessing extraordinary safe-haven demand coupled with sustained central bank purchasing," Dhar noted in his latest commodity outlook. "While recent pullbacks demonstrate gold's inherent volatility, the fundamental drivers supporting higher prices remain firmly in place."
The forecast represents a significant premium over current spot prices, implying roughly 14% upside from April 2025 levels. What makes Dhar's analysis particularly compelling is his focus on structural rather than cyclical factors driving gold's performance.
Gold has already staged an impressive 38% year-to-date gain, far outpacing its 10-year average annual return of 12%. This exceptional performance has raised questions about sustainability, yet Dhar believes further upside remains, contingent upon continued geopolitical uncertainty and central bank diversification away from traditional reserve currencies.
Why Did Gold Prices Drop in Mid-Week Trading?
Gold experienced a significant pullback from over US$3,500/oz to under US$3,300/oz in mid-April trading, triggering a 9% single-day decline in the ASX All Ordinaries gold sub-index. This dramatic shift highlighted the metal's ongoing volatility despite its strong overall trajectory.
The primary catalyst for this correction came from President Trump's unexpected comments suggesting a normalization of trade relations with China. This potential policy pivot represented a marked departure from previous rhetoric and immediately dampened safe-haven demand.
"Markets interpreted these statements as signals that extreme tariffs might be reversed, though certainly not back to zero," explained Dhar. "This created a relief rally in risk assets at gold's expense."
Additional pressure came from reduced concerns about Federal Reserve independence following conciliatory statements from both the White House and Fed officials. The resulting sell-off demonstrated gold's sensitivity to shifts in both trade policy sentiment and monetary policy expectations.
Technical analysts noted that support levels breaking at US$3,400/oz accelerated the decline through algorithmic trading sell-offs, a pattern reminiscent of mid-cycle corrections in 2020 (-12%) and 2022 (-15%) that similarly coincided with Federal Reserve policy adjustments.
What Factors Are Driving Gold's Strong Performance in 2025?
The Weakening US Dollar
The US Dollar Index has recently hit a three-year low (DXY 89.2), marking a profound shift in currency markets. This weakness reflects both structural and policy-driven factors, with significant implications for gold market analysis.
"The US administration appears to be intentionally pursuing dollar depreciation to boost export competitiveness," noted Dhar. "This marks a departure from the traditional 'strong dollar' policy and creates a tailwind for dollar-denominated commodities."
Perhaps more concerning for dollar bulls has been the declining appeal of US Treasuries as safe-haven assets. Heightened fiscal concerns and monetary policy uncertainty have eroded the traditional flight-to-quality benefit these instruments once enjoyed.
Geopolitical Uncertainty
The recent seismic shift in US trade policy under President Trump has injected considerable uncertainty into global markets. Tariff implementations and retaliation measures have disrupted established supply chains and trade relationships, creating an environment where predictability has become scarce.
Tensions between Federal Reserve Chair Jerome Powell and President Trump have further complicated the picture, with public disagreements about monetary policy independence raising concerns about institutional stability.
"Gold has stepped into the void as the market's safe-haven asset of choice," explained Dhar. "When traditional refuges like Treasuries face questions, investors naturally gravitate toward assets with no counterparty risk."
Central Bank Buying Patterns
Perhaps the most structural support for gold comes from dramatically increased central bank purchasing since early 2022. Central banks acquired 1,136 tonnes of gold in 2024 alone, representing a 15% year-over-year increase and continuing a multi-year trend.
This accumulation reflects sovereign concerns about potential US currency reserve freezes following precedent-setting actions against Russian reserves. Countries increasingly view gold as a non-confiscatable asset that remains accessible even during geopolitical conflicts.
The share of global gold reserves held by central banks has risen to 17%, up from 12% in 2022. This shift has come primarily at the expense of dollar-denominated assets, though gold has also been overtaking other fiat currencies like the Pound, Yen, and Euro in reserve bank holdings.
How Are Investors Responding to Gold's Performance?
ETF Investment Trends
Australia has witnessed an extraordinary surge in Gold ETF interest during January 2025, with domestic gold ETF holdings reaching AU$12.4 billion by March – effectively doubling from 2024 levels.
VanEck's suite of gold products has been particularly successful in capturing this demand. "We've seen massive inflows into our Gold ETFs strategies," explained Arian Neiron, VanEck's Managing Director.
The performance metrics tell a compelling story:
VanEck's GDX Gold Miners ETF recorded an impressive $193 million traded value in Q1 2025 alone. Based on current trajectory, analysts project a full-year 2025 traded value of $772 million, representing a 45% increase from the $532 million recorded in 2024.
"Retail investors are increasingly using ETFs to gain leveraged exposure to gold miners," noted Neiron. "The miners offer operational leverage to gold prices, amplifying returns when prices rise substantially."
This demand reflects broader portfolio shifts, with fund managers reporting significant "reallocation from technology stocks to gold" among institutional portfolios seeking diversification. The 30-day volatility of GDX (42%) substantially outpaces spot gold (28%), highlighting the amplified risk-reward profile miners offer compared to the physical metal.
What Are the Risks to CommBank's Gold Price Forecast?
Potential Limiting Factors
Despite the bullish outlook, several factors could limit gold's ascent or even trigger corrections from current levels.
President Trump potentially walking back current trade policies represents a significant risk to the forecast. "Any substantial de-escalation of trade tensions could rapidly diminish safe-haven demand," Dhar cautioned.
Another consideration is that markets may have already priced in significant uncertainty. With gold's RSI hitting 82 in April 2025 – well into overbought territory – technical factors could trigger profit-taking. Analysts note that "12% of gold's 2025 rise is attributable to speculative futures positioning," representing a potentially reversible component of the rally.
Gold has already seen substantial price increases in early 2025, raising questions about valuation. Historical precedent from the 2013 taper tantrum, which saw gold drop 26% as Fed policy normalized, serves as a cautionary tale about how quickly sentiment can shift.
De-Dollarization Challenges
While de-dollarization narratives have supported gold, Dhar remains skeptical about their practical implementation. "There are significant practical limitations to replacing the USD as a global reserve currency," he argued.
These limitations include the high costs to transport, warehouse, and secure physical gold – averaging 0.5% annually compared to Treasury yields of 4.3%. This negative carry represents a real economic cost for central banks and institutional investors.
Additionally, the lack of returns generated by holding gold compared to interest-bearing assets creates a significant opportunity cost, particularly in environments where real interest rates remain positive.
How Have ASX-Listed Gold Stocks Performed?
Top Performers
Several junior explorers have delivered extraordinary returns for investors willing to accept higher risk profiles:
Native Mineral Resources (NMR) has surged an astonishing 310% year-to-date and 596% over the past year, driven by high-grade exploration results in Queensland.
OzAurum Resources (OZM) has delivered equally impressive gains of 283% year-to-date following a 2.1Moz resource upgrade that substantially enhanced project economics.
Aldoro Resources (ARN) and Koonenberry Gold (KNB) have similarly rewarded shareholders with year-to-date returns of 37% and 525% respectively, demonstrating the sector's capacity for generating outsized returns during gold bull markets.
Major Gold Producers
Australia's established gold producers have also benefited substantially from higher gold prices, though with more moderate returns than their junior counterparts:
Evolution Mining (EVN) has gained 66% year-to-date and 102% over the past year, leveraging 32% AISC margins at $1,250/oz that expand dramatically at current gold prices.
Northern Star (NST) has delivered 36% year-to-date returns, with its CEO highlighting how "cost deflation in WA mining regions supports margin expansion" for established operators.
Gold Road Resources (GOR) and Perseus Mining (PRU) have posted gains of 53% and 29% year-to-date respectively, with both companies benefiting from production growth complementing higher gold prices.
The ASX Gold Index currently trades at a forward P/E of 18.7 versus 15.2 for global peers, reflecting the premium Australian operators command due to jurisdictional advantages and operational track records.
What Recent Developments Are Occurring in ASX Gold Stocks?
Redstone Resources (ASX:RDS)
Redstone Resources has resumed diamond drilling at its promising Tollu copper project in Western Australia, triggering renewed investor interest and contributing to the stock's 140% year-to-date gain.
This exploration program received a significant boost after securing exploration incentive scheme co-funding from the WA Government worth up to $220,000. This funding validates the project's potential while reducing shareholder dilution.
The company is specifically targeting a 'Voisey's Bay' style deposit, referencing the world-class nickel-copper-cobalt discovery in Canada. Tollu's diamond drilling aims to reach 1,200m depth, testing sulphide extensions that could substantially expand the resource base.
Management has indicated that copper production could be complemented by precious metals credits, with preliminary metallurgical work suggesting potential for toll processing arrangements for any gold-bearing material.
Advance Metals (ASX:AVM)
Advance Metals has emerged as one of the gold sector's most compelling stories after recently acquiring 80% of the Myrtleford and Beaufort projects in Victoria's historic goldfields. The company's stock has gained 68% year-to-date on the strength of exceptional drilling results.
The maiden drilling program has produced truly spectacular assays up to 446g/t gold, placing it among the highest-grade intercepts reported on the ASX this year. One particularly notable intersection returned 7.5m at 47.9g/t gold, demonstrating both high grade and meaningful width.
AVM Managing Director Adam McKinnon commented: "AMD003 is among Myrtleford's best holes with 446g/t peaks, validating our geological model." The first hole at Myrtleford returned an equally impressive 8.2m at 22.4g/t, suggesting consistent high-grade mineralization across the project.
These results appear particularly significant given Myrtleford's historical production of 2.4Moz between 1850-1950, supporting the potential for defining substantial high-grade resources with modern exploration techniques.
FAQ About Gold Price Forecasts
How high could gold prices go in 2025?
CommBank forecasts gold could reach US$3,750/oz by the end of 2025, representing approximately 14% upside from April 2025 levels. This projection depends significantly on continued geopolitical uncertainty and central bank purchasing patterns. Under more extreme scenarios involving trade war escalation or monetary policy disruption, prices could potentially exceed this target, though such outcomes represent tail risks rather than base cases. According to recent CBA forecasts, gold's performance will likely remain tied to macroeconomic conditions.
What is causing gold's price surge in 2025?
The primary drivers include the weakening US dollar (with the DXY index at three-year lows), declining appeal of US Treasuries as safe-haven assets, geopolitical tensions surrounding trade policy, and increased central bank purchasing as a hedge against currency reserve freezes. As Dhar notes, "Gold's surge reflects its unique role as a non-confiscatable asset" in an environment where traditional reserve currencies face unprecedented challenges.
How is gold performing compared to other safe-haven assets?
Gold has significantly outperformed traditional safe-haven assets like US Treasuries and the US dollar, which have been sold off as their appeal declined due to changing US trade policies and Federal Reserve tensions. Gold's correlation with real yields has broken down (-0.32 since January 2025 versus -0.68 historically), demonstrating its decoupling from traditional price drivers and highlighting its increasingly monetary rather than commodity-like behavior. This performance underscores gold's role as a hedge in modern portfolios.
Is gold replacing the US dollar as a global reserve currency?
While gold has gained prominence in central bank holdings, complete replacement of the USD remains unlikely due to significant practical limitations. Despite Fed Chair Powell's assurance that there's "no active de-dollarization policy," central banks have diversified reserves meaningfully. Gold's share of global reserves has increased to 17% (from 12% in 2022), but structural factors including high costs of transport, storage and security, plus gold's lack of yield compared to other assets, prevent it from fully displacing fiat currencies in reserve portfolios. These dynamics are part of broader global commodities insights affecting market trends.
Understanding the difference between investing vs speculating becomes crucial when considering gold positions, as investors should determine whether their gold allocation represents a strategic hedge or a tactical bet on continued price appreciation. According to expert Goldman Sachs forecasts, distinguishing between these approaches can significantly impact portfolio performance when allocating to precious metals.
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