From about USD2,600 / oz at the start of 2025, gold price has soared by almost 1/3 to just under USD3,500 / oz by late April. Thereafter, gold price fell back to consolidate around USD3,200 / oz by mid May on the latest news of temporary trade tariff reprieve between US and China. At its current level of about USD3,200 / oz gold continues to rank high as one of the best performing assets year-to-date.
What’s driving the surge?
Mr Heng Koon How, head of Market Strategy, Economics and Treasury Research at UOB, points to two groups of investors:
- Central banks in Asia – including Singapore – and emerging markets that are increasing their allocation of reserves into gold, and;
- Retail investors who are rushing to buy physical gold and jewellery amid economic and geopolitical uncertainties.
On the central bank front, “China (in particular) caught everyone’s attention with its strong allocation into gold”, Mr Heng, says.
According to the World Gold Council (WGC), China’s official holding of gold rose 20% from 1,900 tonnes just two years ago to about 2,295 tonnes as of April 2025. This accounts for more than 6% of the country’s total reserves.
Typically, central banks in Asia and emerging markets hold less than 5% of their balance sheets in gold, explains Mr Heng, while those in Europe and developed markets hold an average of 10% or more.
But the elevated risk of global trade conflicts and sanctions are motivating central banks in Asia and emerging markets to increase their allocation, he says.
An annual WGC survey of global central banks published in June found that central banks in emerging markets cite gold’s immunity to sanction risks and pessimism towards the US dollar as two top reasons for allocating more reserves into gold.
Meanwhile, more retail investors globally are buying physical gold products like gold wafers and nuggets as a hedge against increasing uncertainty.
Across Asia, retail investors are flocking to stock up on physical gold in countries like China, Thailand and Vietnam. Singapore banks noted an increase in young retail investors turning to gold as an affordable investment option. On average, gold dealers in Singapore reported a 35% surge in gold bullion purchases in Singapore across the first quarter of 2025, the largest year-on-year jump over the past decade.
The trend is fuelled by geopolitical risks, Mr Heng explains, pointing to the Russia-Ukraine and Israel-Palestinian conflicts, and “currency depreciation across emerging markets and in Asia over the past few years”. The uncertain trade policies from the second Trump administration, including the imposition of universal and reciprocal tariffs on other countries by the US also added to global safe haven needs for gold.
Is now a good time for you to invest in gold?
In general, a key advantage of investing in gold, notes Mr Heng, is that it will diversify the risk of an investment portfolio and help reduce volatility.
For regular investors, gold can serve as a hedge against inflation and is considered a relatively safe haven due to its overall strong price performance.
Overall, gold has been “a relative oasis of calm” amid elevated volatility in global markets this year, Mr Heng observes.
“Over the medium to longer run, volatility in the financial markets, ongoing global geopolitical risk and elevated policy risk under the second Trump administration may lead to even stronger safe haven demand for gold.”
After the strong run-up since the start of the year, some near term consolidation around current level of USD3,200 /oz is in order across the second quarter of 2025, thereafter UOB forecasts that gold prices will trade up to USD3,600 / oz by first quarter 2026.
However, sudden interest rate changes could derail the current price trajectory, Mr Heng warns. If the US Fed and other global central banks unexpectedly stop cutting rates, or start hiking interest rates, gold prices could fall.
How much gold should you own?
This depends on your own risk tolerance. A 3 to 5% portfolio diversification into gold is a prudent starting point, says Mr Heng.
He also notes that unlike other types of investments, gold does not generate regular returns in the form of interest or dividends. Hence, investors need to consider this opportunity cost when choosing gold over investments like stocks and bonds.
MoneySense, Singapore’s national financial education programme, highlights that all investments come with risks.
It’s important to understand your own risk appetite, and the investment product’s risks and features before investing. Your risk appetite should be defined by how much you can afford to lose, rather than how much you want to make, MoneySense notes.
How can you start investing in gold?
If you’re interested in investing in gold, here are a few ways to get started.
- Buy physical gold
As tangible assets, physical gold such as gold bars and coins can provide investors with a sense of ownership. However, holding physical gold requires storage and security, and this can be costly.
UOB is the only bank in Singapore that offers physical gold investments for clients. They can be bought and sold at UOB’s Main Branch (at UOB Plaza 1). Existing UOB internet banking users can also buy gold online and collect the gold pieces at UOB’s Main Branch within five working days.
- Buy gold certificates
Offered by banks including UOB, gold certificates allow you to own gold without worrying about storage. The certificates are proof of ownership and can be exchanged for cash or physical gold. These are sold in kilobars, at up to 30 kilobars per certificate.
However, gold certificates rely on the issuing institution’s credibility and stability. If the issuing institution faces financial issues, redeeming the certificate could become difficult.
- Use a gold savings account
Several banks in Singapore, including UOB, offer gold savings accounts that allow you to buy and sell gold digitally without holding physical gold. The transactions are managed by the banks.
Similar to gold certificates, gold savings accounts rely on the credibility of the bank. You can invest in small amounts at the current market price. For example, the UOB Gold Savings account allows investors to make a minimum transaction amount of five grammes, priced at SGD656.20 as of 15 May 2025.
- Through gold exchange-traded funds (ETFs)
Gold ETFs track the price of gold and can be bought and sold on the stock exchange, through brokerage accounts. They offer a way for you to invest in gold without tying up a big part of your capital with physical gold.
Gold ETFs typically have low fees since no physical storage is required. But they may not accurately track the actual price movements of gold.
Find out more: Gold & Silver | UOB Singapore
First published in Rethink Your Wealth, a series that provides practical insights and answers on wealth-related topics, to help you transform the way you approach finances.
Article updated with gold price and UOB forecasts refreshed as of 15 May 2025.
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