Gold's Performance Against M2 Money Supply Tests Historic Levels Amid Bullish Run

Gold has exceeded expectations in 2025, rising 60% YTD to $4,340 per ounce. Its performance relative to the M2 money supply suggests the bull market may have further to run, with historically significant levels last seen during the 1970s stagflationary cycle. The gold/bitcoin ratio is up 50% YTD, with bitcoin approaching a market cap of $2 trillion, corresponding to a price of $100,000 and aligning with its 365-day moving average.

Gold has exceeded expectations in 2025, rising 60% year-to-date (YTD) to $4,340 per ounce. Its performance relative to the M2 money supply suggests the bull market may have further to run, with historically significant levels last seen during the 1970s stagflationary cycle. The gold/bitcoin ratio is up 50% YTD, with bitcoin approaching a market cap of $2 trillion, corresponding to a price of $100,000 and aligning with its 365-day moving average.

HSBC has raised its average gold price forecasts, signaling a dramatic shift in precious metals market expectations, according to a Discovery Alert report. The investment bank now projects average gold prices of $3,355 per ounce for 2025 (up from $3,215) and $3,950 per ounce for 2026 (revised from $3,125). This represents a substantial $140 per ounce increase for 2025 and an impressive $825 per ounce boost for 2026 projections.

Several factors are driving HSBC's gold price optimism. Geopolitical risks are escalating across multiple regions, creating sustained demand for safe-haven investments. The weakening US dollar and monetary policy shifts towards accommodation also support gold appreciation. Mounting fiscal deficits in major economies prompt investors to seek alternative stores of value, further boosting gold demand. Central banks are also expanding gold reserves, adding to the bullish outlook, the report notes.

HSBC expects central bank demand to remain elevated through 2026, buoyed by geopolitical risks and dollar diversification initiatives. The official sector's increased gold allocations within foreign exchange reserves provide a fundamental floor for gold prices, supporting HSBC's bullish medium-term outlook, the report adds.

Investment funds and institutional portfolios are increasingly incorporating gold as a portfolio diversifier amid persistent market volatility. This professional interest supports HSBC's higher price targets. Professional forecasters increasingly align on gold's fundamental value during current market conditions, creating reinforcing demand patterns, according to the same report.

Gold's performance relative to the M2 money supply suggests the bull market may have further to run. The gold/bitcoin ratio's 50% YTD increase and bitcoin's approaching market cap of $2 trillion indicate a strong bullish sentiment in the precious metals market. The gold/bitcoin ratio's alignment with bitcoin's 365-day moving average further supports this bullish outlook.

HSBC's gold price framework for 2025 and 2026 is $3,355 per ounce and $3,950 per ounce, respectively, with a record high of $4,250.89 per ounce achieved on October 16, 2025. Professional forecasters expect periodic volatility within established trading ranges, though the overall trajectory remains positive given fundamental support factors, the Discovery Alert report concludes.