Gold extended its remarkable 2025 rally on Friday, rising about 1.5% to $3,446 per ounce in New York morning trading as safe-haven demand accelerated following Israel’s overnight airstrikes on Iran’s nuclear and missile infrastructure — a move that threatens to destabilize an already volatile Middle East.
Israel’s targeted strikes reportedly destroyed key components of Iran’s nuclear facilities and killed senior military officials, including the head of the Islamic Revolutionary Guard Corps.
Iran has vowed retaliation, raising fears that oil supply routes through the Strait of Hormuz could be compromised. This, alongside broader fears of a regional war, has rattled markets and pushed investors into traditional safe havens.
With Friday’s gains, gold is now up 31% year-to-date through June 13, marking its strongest first-half performance in over four decades. The last time bullion posted a bigger six-month gain was in the second half of 1982, when it climbed 42%. On a rolling six-month basis, the current rally is the strongest since the 2007–2008 financial crisis period.
Gold — as tracked by the SPDR Gold Trust GLD — is now just shy of its April record high of $3,500, with renewed momentum pushing it closer to a fresh peak.
Yet, analysts say investors remain underexposed to the yellow metal, raising the possibility that fear of missing a major bull cycle could soon take hold.
Investors Have Yet To Increase Their Gold Exposure
“We estimate that investors have allocated 3.5% of their portfolios, which does not seem excessive and it is still short of the all-time highs in 2011,” said Bank of America’s commodity analyst Michael Widmer in a note shared Friday.
Meanwhile, central banks have sharply ramped up their purchases, now holding gold equivalent to nearly 18% of outstanding U.S. public debt, up from 13% a decade ago.
At market valuations, gold’s share of total global foreign reserves rose to 20% by the end of 2024, overtaking the euro’s 16% share.
Emerging and developing nations in particular were responsible for over 1,000 tonnes of gold purchases last year, double the previous decade’s average.
Daan Struyven, analyst at Goldman Sachs, said central bank gold buying has averaged 88 tonnes per month this year — ahead of the firm’s projection of 80 tonnes per month through mid-2026.
US Debt Problems Now Central To Gold’s Next Move
Analysts say the metal’s long-term trajectory will hinge on fiscal and monetary dynamics in the United States.
President Donald Trump‘s expansive “Big Beautiful Bill,” currently advancing through Congress, is expected to widen the budget deficit further in the second half of 2025.
According to economists tracking the legislation, even under optimistic scenarios, deficits will remain persistently high — keeping investor anxiety over fiscal sustainability elevated regardless of Senate negotiations.
This macro backdrop—marked by fiscal stress, volatile interest rates, and a weakening U.S. dollar—forms the structural foundation for gold’s continued rise. Should the U.S. Treasury or Federal Reserve be forced to intervene in markets, analysts say gold could see a further tailwind.
“Continued apprehension over trade and U.S. fiscal deficits may well divert more central bank purchases away from U.S. Treasuries to gold,” said Bank of America’s Widmer.
“While wars and conflicts are usually not sustained price drivers, we see a path for gold to rally to $4,000/oz over the next 12 months,” he added.
Goldman maintains its price forecast of $3,700 per ounce by year-end and $4,000 by mid-2026, reiterating a “long gold” recommendation.
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