Mr. Shaokai Fan, Regional Director for Asia Pacific (excluding China) and Global Central Bank Director at the World Gold Council (WGC), recently addressed the media regarding the latest developments in the gold market and its outlook for the remainder of the year.
Mr. Shaokai Fan, Regional Director for Asia Pacific (excl. China) & Global Central Bank Director, World Gold Council, speaks to the media. Screenshot
According to Mr. Fan, the preliminary agreement between the US and China to temporarily halt tariffs had an immediate impact on gold prices. This aligns with expectations, as gold price fluctuations over the past year have been largely driven by trade tensions.
While the agreement is a positive step, it does not eliminate the barriers that have been in place since President Donald Trump took office. It is still too early to determine the full impact, as we need to observe what happens after the 90-day period. Mr. Fan perceives a more moderate approach being taken by the US regarding trade.
Currently, trade tensions are the dominant factor influencing gold prices, outweighing other factors. Everything will depend on the long-term stance of the US and how the market perceives, interprets, and evaluates the relationships between nations, the US dollar, and US bonds.
Regarding the outlook for the gold market for the rest of the year, Mr. Fan noted that central banks have slowed down their gold purchases in the first quarter of this year, but overall, buying remains strong. There is still room for more purchases, as gold currently accounts for only 5-10% of central banks’ reserves. The WGC is conducting its annual survey of central banks, with results expected by the end of June.
It is predicted that the inflows into gold ETF (exchange-traded funds) in April marked the end of a strong inflow phase. May could see a reversal of this trend, with outflows potentially exceeding inflows.
In the medium to long term, US inflation will also impact gold prices. If inflation rises, it could lead to a recession and a response from the US Federal Reserve.
“Trade negotiation policies are the dominant factor for the remaining months of the year, but it will take time to see the full picture. Things remain unpredictable, and investors may turn to gold to preserve their wealth in these uncertain times,” said Mr. Shaokai Fan.
Gold Price Differential to Persist
In the first quarter of 2025, investment demand for gold bars and coins increased significantly in ASEAN markets, with the exception of Vietnam. This demand decreased by 15% compared to the same period last year due to limited supply of gold products, resulting in a high price differential. This comes after Vietnam recorded the highest investment demand in the first quarter of 2024 in a decade. However, it still marked a 46% increase compared to the fourth quarter of 2024. Jewelry consumption increased by 5% compared to the first quarter.
“It’s important to note that the decrease in demand is due to price factors rather than consumer sentiment. The same is true globally. Additionally, a weak local currency further increases the dollar-denominated gold price, affecting buyers’ purchasing power,” Mr. Shaokai Fan assessed.
Beyond international trade, gold’s outlook is also dependent on domestic factors, such as the local currency and alternative investment avenues like real estate and stocks.
“While the WGC does not make predictions about gold prices, we can say that investment demand for gold remains robust. Vietnam has a different management approach than other countries, so it’s challenging to accurately predict gold price movements. However, the price differential between Vietnamese and international gold prices is expected to persist in the coming period,” he stated.
Advice for Gold Investors
Mr. Fan also cautioned gold investors about the shorter gold price cycles we are experiencing today. “Changes are sudden and daily, such as the US and China’s announcement of a temporary halt to tariffs. Such factors will cause gold prices to drop, and we need to be prepared for these rapid shifts,” he advised.
His advice for individual investors is to carefully consider gold’s role in their portfolios and strengthen their resilience to fluctuations in today’s volatile environment. Stability is decreasing, and uncertainty is on the rise. Even with positive short-term news, no one knows what tomorrow may bring. Investors should always be prepared for surprises in the future.
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