• Stable Gold Prices: Gold prices ended May 2025 at US$3,278 per ounce, reflecting a minor decline of 0.7%
• Investor Behaviour: Despite a strong year overall, with a 26% rise since January, investors withdrew US$1.8 billion from gold ETFs in May
• Market Influences: Factors such as potential U.S. tariffs, inflation concerns, a weaker dollar, and expectations of stagflation created a complex environment for gold

Harare- Gold prices ended May 2025 nearly unchanged, dipping just 0.7% to US$3,278 per ounce. Despite this flat finish, prices bounced around during the month due to mixed economic signals.

Gold has had a strong year overall, climbing 26% since January, as investors turned to it for safety amid global uncertainties.

Several factors pushed gold prices up or held them back in May, creating a delicate balance that kept prices stable.

Worries about new U.S. tariffs, especially from the Trump administration, made gold more appealing. Tariffs can shake up global trade, prompting investors to buy gold as a safe bet. On May 29, a U.S. court blocked these tariff plans, briefly boosting stocks and reducing gold’s shine.

However, the possibility that the administration could work around this ruling kept uncertainty high, supporting gold prices. This fear of trade disruptions was a key reason gold didn’t fall further.

Many expected tariffs to push up prices, fueling inflation concerns. While official data showed low inflation, unofficial signs pointed to rising costs, encouraging investors to buy gold as a shield against inflation.

When people worry their money will buy less in the future, gold often benefits because it holds its value.

These inflation expectations were a major factor keeping gold prices steady in May.

Also, in April, the U.S. dollar weakened, and this effect lingered into May. A cheaper dollar makes gold more affordable for buyers using other currencies, increasing demand.

This helped prop up gold prices, preventing a bigger drop despite other pressures. The dollar’s performance is always a big driver for gold, and its weakness was a clear positive in May.

However, not all news was good for gold.

Investors withdrew US$1.8 billion (19 tonnes) from gold exchange-traded funds (ETFs), mostly in North America (US$1.5 billion or 16 tonnes).

This happened as tariff fears eased slightly, reducing the urgency to hold gold.

When money flows out of ETFs, it signals weaker demand, which can pull gold prices down. These withdrawals were a major reason gold didn’t rise in May.

Gold had a strong run in April, which made it harder for prices to keep climbing in May. After big gains, investors often pause, waiting for new reasons to buy.

 This “momentum slowdown” acted like a brake, keeping gold’s growth in check. The strong April performance meant May’s flat result wasn’t surprising, as markets took a breather.

In the COMEX market, investors slightly increased their bets that gold prices would rise, adding US$0.5 billion (4 tonnes) in positions.

But these bets were much smaller than in December 2024, when they hit 35% of open interest, compared to just 13% in May. This cautious approach showed investors were unsure about gold’s short-term direction, limiting its ability to climb higher.

Tariffs raised fears of “stagflation” when prices rise but economic growth slows. Data showed U.S. companies were absorbing tariff costs, as profit margins shrank (April’s Producer Price Index reported a 1.6% drop in trade margins).

Public criticism of companies like Amazon and Walmart for trying to pass costs to shoppers backed this up. Over time, higher consumer prices could spark stagflation, which is great for gold.

In stagflation, stocks, bonds, and other commodities often struggle, while gold shines. Even just expecting stagflation helped gold hold steady in May.

Global central banks’ moves also played a role. The European Central Bank  cut interest rates on June 5, and India’s central bank eyed a cut on June 6, both worried about slow growth.

Japan’s central bank was expected to hold rates on June 16, despite inflation risks from tariffs. In the U.S., the Federal Reserve’s June 18 meeting was unlikely to change rates, but it would watch for economic slowdowns while ignoring temporary tariff-driven inflation.

This uncertainty makes gold attractive, as investors seek safety. Higher treasury yields from inflation fears could also support gold prices.

Why Gold Stayed Flat

Gold’s flat performance in May came from a tug-of-war. Trade tensions, inflation fears, and a weaker dollar pushed prices up, while ETF outflows, April’s strong gains, and cautious investors pulled them down.

The looming risk of stagflation and global economic uncertainty kept gold appealing, but its big gains earlier in 2025 made further jumps harder.

As tariffs and inflation worries unfold, gold’s role as a safe-haven asset will likely continue driving its performance.

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