Central bank buying and a falling US dollar are supporting the gold price. Credit: Adobe Stock
The gold price’s sustained rally through the first half of 2025 reflects deeper shifts in global financial power, with central banks accelerating a move away from the US dollar and into bullion as a geopolitical hedge, according to the latest monthly report by Sprott Asset Management.
Chart 1. Gold and mining equities led global asset returns in the first half of 2025. Source: Sprott, Bloomberg
The Toronto-based asset manager said gold rose for the sixth straight month in June to close at $3,303.14 per oz., up 0.42% from May and 25.86% since the start of the year. Silver also gained 9.48% in June to $36.11 per oz., breaking through resistance at $35 and extending its year-to-date gains to nearly 25%.
“Gold remains well supported by central banks and sovereigns, while investment fund positioning remains at modest levels,” Sprott market strategist Paul Wong wrote in the July 7 report.
Chart 2. Gold has remained in a rising channel since early 2023. Source: Sprott, Bloomberg
The rally comes amid a weakening US dollar and concerns about long-term US fiscal health. The US Dollar Index (DXY) dropped 2.5% in June and is down more than 10% on the year. The S&P 500, meanwhile, hit record highs, helped in part by rising expectations of a US rate cut and a surge in corporate share buybacks.
Sprott argues the US is shifting from a strong-dollar stance to a policy of financial repression aimed at making government debt more manageable. The Trump administration is pressing the Federal Reserve for rate cuts, and new rules proposed in June would make it easier for banks to hold trillions more in Treasuries.
In Wong’s view, “policy is shifting from fighting inflation to financing deficits, at any cost.”
Chart 3. Silver broke out above $35 in June and is now approaching its technical target of $40 per oz.
Sprott highlights recent findings from the World Gold Council’s 2025 central bank survey, which showed a record 43% of respondents intend to increase gold holdings and none plan to cut them. Ninety-five percent expect global gold reserves to rise in the year ahead. Among emerging and developing economies, gold is being embraced as a tool for “monetary self-determination” and a shield against the financial leverage of sanctions or capital controls.
Chart 4. Central banks cited crisis resilience, diversification, and geopolitical risk as top reasons to hold gold.
Sprott also noted structural changes in the silver market. Unlike gold, which is increasingly held by official-sector buyers, silver remains driven by investor flows. But a large drawdown of inventory — estimated at more than 800 million oz. during the 2020s — has changed its price dynamics. According to the report, it now takes fewer ounces of silver ETF and futures buying to push up prices than in the past, increasing the likelihood of a “squeeze.”
Chart 5. Since 2024, smaller buying flows have had outsized impacts on silver prices, raising the risk of a price spike.
Gold and silver equities have also benefited from the rally. The NYSE Arca Gold Miners Index rose 3% in June and is up more than 52% on the year, making it the top-performing asset class tracked by Sprott.
With structural forces aligning against the dollar and monetary authorities in the developing world turning to bullion, Sprott concludes that precious metals are entering “a new regime of strategic ownership,” one defined less by inflation hedging and more by geopolitical hedging and trust in monetary sovereignty.
