The window dressing phenomenon is expected to again influence financial market movements throughout 2025, especially as each quarter approaches its close. This strategy is generally employed by investment managers to enhance portfolio performance in periodic reports, often encouraging the strengthening of risky assets such as stocks. However, this shift in sentiment also has different implications for hedge funds, particularly gold.

Quarter One (Q1): Limited Pressure for Gold

At the end of March 2025, Q1 window dressing tended to be moderate. Funds began flowing into blue-chip stocks after the volatility at the beginning of the year, driving risk-on sentiment. As a result, gold prices have the potential for limited movement or a mild correction, although the weakening is usually not aggressive as investors still consider global economic risks and central bank policies.

Quarter Two (Q2): Gold Moving Sideways

Entering the window dressing period at the end of June 2025, market focus is on evaluating first-half performance. Interest in risk assets increases, but not as strongly as at the end of the year. During this phase, gold tends to move sideways, with relatively balanced pressure between the diversion of funds into stocks and the demand for hedging against macroeconomic uncertainty.

Q3: Lightest Window Dressing Pressure

Window dressing at the end of September 2025 is generally weaker because market volume tends to be thin after the summer period. The impact on gold is relatively minimal. Gold prices are likely to be more influenced by fundamental factors, such as the direction of global interest rate policy, inflation data, and geopolitical risks, rather than seasonal window dressing itself.

Q4: Short-Term Pressure, Potential for a Rebound

The December 2025 window dressing is the strongest of the year. The surge in interest in stocks often triggers risk-on sentiment, which puts pressure on gold in the short term. However, this pressure is usually temporary. After the window dressing ends and the market enters the beginning of the next year, gold often rebounds, supported by hedging, portfolio rebalancing, and global uncertainty.

Conclusion

Overall, the impact of window dressing on gold in 2025 is seasonal and temporary. The greatest pressure typically occurs in Q4, while Q1–Q3 tends to have a limited impact. The medium-term direction of gold prices remains more determined by global monetary policy, inflation, and geopolitical dynamics than mere window dressing. (Cay)

Source: Newsmaker.id