Gold remains popular among investors, fueling a surge in demand on a global scale
UK Gold Demand Surges Amid Economic Uncertainty
In an unprecedented move, the UK tax burden is poised to reach a new high as a proportion of GDP, according to Paul Williams, managing director of Solomon Global. Amidst this economic turmoil, gold has emerged as a beacon of tax-efficiency, attracting a significant surge in demand.
Gold dealer Solomon Global attributes the rising UK interest in gold to its tax-free status. This tax-efficiency, coupled with gold's historical appeal and portfolio diversification benefits, has made it a smart, attractive alternative for UK investors facing economic uncertainty and mounting tax pressures.
The precious metal gold rallied over the first half of the year, recording a 26% rise against the dollar. This surge was mirrored in the global market, with total investment in gold exceeding 1,000t – a figure last seen in the first half of 2020. The Chinese market showed high demand for bars and coins, and Europe also recorded strong growth as gold investment doubled from the prior year.
Central banks added 166t to their reserves of gold, but at a slower pace compared to previous periods. Despite this deceleration, the World Gold Council's annual central bank survey shows that 95% of reserve managers believe global central bank gold reserves will increase over the next 12 months.
Analysts increased their forecasts for the average price of gold to 15.5% over the rest of the year, according to the London Bullion Market Association. Mid-2025 surveys and AI-driven forecasts compiled by BullionVault and other sources predict gold prices for Q3 and Q4 of 2025 mostly within the $2,700 to $3,700 range, with some optimism pushing toward $3,000+ by year-end.
The increase in demand for gold is attributed to persisting market volatility, including trade tensions, unpredictable US policy shifts, and frequent geopolitical flashpoints. These factors, along with macroeconomic conditions, the US dollar's strength, interest rates and Fed policy, geopolitical tensions, central bank demand, and long-term structural factors, are expected to influence gold prices in the second half of 2025.
The UK recorded a 17% increase in demand for European-listed gold funds year on year in the second quarter. This trend was also reflected in the growing popularity of gold-backed exchange-traded funds (ETFs), with global holdings increasing by 397t over the first half of the year.
In conclusion, the second half of 2025 is expected to see gold prices maintain elevated levels with potential mild upside (0%-5% increase) under consensus economic conditions but could rise as much as 10%-15% if macro and geopolitical risks worsen. Downside risks, tied to conflict resolution and dollar strength, could partly retrace 2025 gains but seem less likely in the current environment. The increasing demand for gold in the UK reflects a growing awareness of its tax-efficient benefits, making it a strategic, tax-efficient alternative for UK investors navigating economic uncertainty.
In the UK, gold investment has surged as a result of economic uncertainty, providing a tax-efficient haven for investors facing mounting tax pressures. This trend is mirrored in global markets, where gold has emerged as an attractive alternative for investors seeking portfolio diversification in volatile financial markets. As central banks continue to accumulate gold reserves and prices are predicted to remain high, the real-estate of gold investment appears to be a solid choice for those looking to secure their financial future.
