Will Gold Climb Higher in 2025?

In January 2020, the average price of an ounce of fine gold stood at $1,560.67 USD; by April 2022, it had risen to $1,935.04 USD. Although gold prices fluctuate monthly, the overall trend steadily increases its annual average. For example, in 2001, the price was just $271 per ounce, climbing to around $1,670 by 2012. 

By 2021, the annual average price reached $1,798.61 per ounce. Global demand for gold peaked in 2019 at 4,355.7 metric tons but dropped to 3,759.6 metric tons in 2020 due to the impact of the COVID-19 pandemic, marking the first year since 2009 that demand fell below 4,000 metric tons. As of June 2024, the average London morning fixing price for an ounce of gold was $2,325.34 USD, a slight decrease from the previous month's average of $2,350.55 USD.

Let’s look at the future price trends for gold in 2025. 

Goldman Sachs sets a target of $3000 per ounce

Goldman Sachs forecasts a significant rise in gold prices, projecting the precious metal will hit $3,000 per ounce by December 2025. This prediction is underpinned by strong demand from central banks, particularly those in emerging markets, as well as the Federal Reserve's anticipated interest rate cuts. The rally is expected to be driven by both structural and cyclical factors. Central bank gold purchases, which have surged since 2022 due to geopolitical tensions, such as the freezing of Russian assets and concerns over financial sanctions, have reset the price levels of gold. 

Additionally, the expected decline in interest rates in 2025 should further increase gold's appeal, as the metal thrives when yields on other assets, such as bonds, decline.

Gold's relationship with interest rates remains crucial; it tends to become more attractive when rates are low, as it does not yield income. However, Goldman analysts, including Lina Thomas, note that the growing central bank demand has been a more powerful driver of gold's price movement since 2022. 

Fed's policy could weaken USD, strengthen gold

The Federal Reserve's expected policy shift towards lower interest rates could weaken the US Dollar, creating favorable conditions for gold, as per CNBC. Gold becomes more attractive as rates decline since it doesn't offer yield, unlike interest-bearing assets. This environment often leads to a depreciation of the Dollar, boosting the demand for gold as a less risky asset. Central banks, especially those in emerging markets, have already been increasing their gold reserves, and the Fed's monetary easing will likely encourage further purchases.

Moreover, concerns about the sustainability of US fiscal policies, including rising debt levels, are prompting more investors to seek gold as a store of value. As central banks diversify away from Dollar-denominated assets, gold is seen as a hedge against currency risks and inflation. This combination of a weaker Dollar, lower interest rates, and growing geopolitical uncertainty is expected to support gold's upward momentum, driving prices higher through 2025.

Spot gold price to continue rising

The price of spot gold is expected to continue its upward trajectory, driven by growing central bank demand and anticipated US interest rate cuts. Central banks, particularly in emerging markets, have been increasing their gold reserves as a hedge against economic instability and geopolitical risks. 

Additionally, with concerns over US fiscal sustainability and the weakening of the Dollar, gold's appeal as an investment remains strong. As interest rates fall, gold becomes more attractive to investors seeking alternatives to yield-bearing assets, potentially pushing prices to new record highs. The price has already seen a significant rally, surpassing $2,790 recently.

Major banks anticipate that gold's rally will extend into 2025

Major global banks forecast that gold will continue its upward trajectory well into 2025, driven by strong demand and supportive macroeconomic factors. Central banks, especially in emerging markets, are projected to maintain their substantial gold purchases, which will play a key role in supporting prices. 

Furthermore, a potential resurgence in inflows to exchange-traded funds (ETFs) will add further momentum to gold's rally. This forecast is supported by expectations that major central banks, particularly the US Federal Reserve, will continue to cut interest rates, providing a favorable environment for non-yielding gold. 

Bank analysts anticipate that gold could hit new highs, potentially reaching $2,900 per ounce by early 2025, with a long-term target of around $3,000 per ounce, as central bank buying and investor flows continue to provide support.

Citi's resilient outlook

Citi maintains a resilient outlook on gold, forecasting that the precious metal will remain strong through 2025. The bank cites a combination of factors, including the expected deterioration in the US labor market, which suggests that the US  economy is in its late cycle. This backdrop, along with persistent central bank demand, positions gold to continue its rally. 

Additionally, Citi notes that geopolitical risks, particularly potential oil price spikes from Middle East tensions, could further boost gold's appeal. Gold is expected to favor a lower interest rate environment, with central banks worldwide, including the Fed, remaining key buyers. Citi highlights that gold's ability to hedge against risks such as economic slowdowns and financial uncertainty adds to its bullish case, with gold's price forecast to rise towards $2,900 to $3,000 per ounce by early 2025.

JP Morgan's supportive view on gold 

J.P. Morgan remains supportive of gold, citing both strong physical demand and ongoing investor interest, especially through ETFs, as key drivers of the metal's continued price increase. The bank highlights that gold's significant purchases from central banks in China and other countries have bolstered gold’s performance. 

With the Fed's easing cycle underway, including anticipated rate cuts, J.P. Morgan expects gold to thrive in the low-interest-rate environment. Gold's appeal as a non-yielding asset becomes particularly strong during economic uncertainty and geopolitical tension. 

Moreover, J.P. Morgan notes that the US presidential elections that occurred in November could lead to increased market volatility, which may further propel gold prices as investors seek less risky assets. Overall, J.P. Morgan projects gold to reach approximately $2,500 to  $2,775 per ounce by the end of 2025, potentially rising even further depending on market conditions.

Wall Street's gold investment outlook to near $3000

Wall Street's outlook on gold has become increasingly bullish, with the precious metal outperforming the broader US stock market in 2024. Gold has surged approximately 21% this year, while the S&P 500 has risen by 16%. In August 2024, it reached a new record high, surpassing $2,500 per ounce. Analysts are now predicting that gold could approach $3,000 in the near future, driven by factors such as expected US Federal Reserve rate cuts and continued geopolitical uncertainties.

As fears of a recession remain, with weak economic data and softness in sectors like homebuilding, the Fed is expected to implement more aggressive rate cuts. Commerzbank Research has raised its forecast for gold, predicting that the price could rise to $2,600 by mid-2025 and then dip to $2,550 by year-end due to inflation and the possibility of interest rate hikes.

XAU/USD could soar 

Gold prices have been surging to new heights in 2024, with the XAU/USD index tracking the metal's performance nearing a price of $2,640, just shy of its all-time high of $2,685. Investors are watching closely as gold looks poised to break the $2,700 barrier. 

The bullish momentum surrounding gold remains robust, driven by factors like economic uncertainty, geopolitical tensions, and anticipated interest rate cuts by central banks. As these elements continue to support demand for gold, analysts predict that gold prices could continue their upward trajectory. 

A potential rise above $2,700 would signal that gold is in a strong bull market, attracting further investment. With market sentiment remaining positive, the outlook for gold is bullish. It suggests it could hit new record highs before the year's end, making it an attractive option for investors seeking to capitalize on its strength.

12.5% ROI on gold investments predicted 

Gold has been one of the standout performers in 2024, achieving new all-time highs and showing no signs of slowing down. Predictions indicate that the precious metal could deliver a 12.5% return on investment (ROI) for those holding gold through the next year. 

Factors contributing to this optimistic forecast include ongoing central bank purchases, geopolitical instability, and expectations of lower interest rates. As central banks continue to diversify their reserves, especially amid concerns over the stability of the USD, demand for gold is expected to remain strong. 

Additionally, gold tends to perform well in times of economic uncertainty and when inflation risks rise. Given these conditions, investors will likely see gold prices continue upward, with potential returns surpassing 12% by the end of 2025. Gold's role as a dependable asset further supports its bullish outlook for the foreseeable future.

A  possible 50% upside on gold 

Gold prices could see significant gains through 2025, with some forecasts predicting a 50% upside if inflation surges again. 

Market veteran Ed Yardeni has suggested that gold could reach as high as $3,500 per ounce by the end of next year, representing nearly a 50% increase from current levels of around $2,347. Yardeni's bullish outlook is based on the possibility of inflation spiking to a second peak, reminiscent of the 1970s' wage-price spiral, which saw gold prices soar from $35 to $665 an ounce.

Despite a recent cooling of inflation from its peak above 9% in 2022, experts remain wary of another inflationary surge. Factors like supply chain disruptions, geopolitical conflicts, and the strength of the US labor market could contribute to rising prices. Additionally, oil prices, which recently crossed $90 a barrel, could fuel inflation further if tensions in the Middle East escalate, pushing crude oil over $100 a barrel.

Yardeni predicts a 20% chance of a second inflation peak, which would likely push gold prices toward the $3,000-$3,500 range. Other economists, including David Rosenberg, also see potential for significant upside, with estimates suggesting a 30% gain for gold driven by risks from Federal Reserve rate cuts and geopolitical instability.

ASX 200 gold stock prices to grow

ASX 200 gold stocks are riding high, with many producers favoring record gold prices and promising forecasts for 2025. The price of gold has surged to new all-time highs, currently trading at around US$2,730 per ounce (AU$ 4,102), up 38.5% from just one year ago (as of October 2024). 

This surge has propelled the stock prices of key ASX 200 gold producers, such as Northern Star Resources, Newmont, Ramelius Resources, Evolution Mining, and Perseus Mining, which have all seen substantial gains in the past year.

A major factor driving gold's rally is the easing of interest rates by central banks, particularly the US Federal Reserve. 

The US Fed's recent rate cuts have supported this trend, with further reductions expected in the coming months, which could continue to weigh on the US Dollar and boost gold prices.

Gold's less risky status has also significantly influenced its performance. The ongoing geopolitical uncertainties, particularly the war in Ukraine and tensions in the Middle East have led retail and institutional investors to seek out gold as a store of value.

The Commonwealth Bank of Australia (CBA) forecasts that gold could rise another 10%, potentially hitting US$3,000 per ounce by the end of 2025. This outlook is supported by a predicted 6% decline in the US dollar, further boosting the appeal of gold as an investment asset.

Trading the gold market as 2025 begins

Gold is expected to climb higher in 2025, with various factors supporting its upward trajectory. Central banks, particularly in emerging markets, are increasing gold reserves to hedge against economic instability and geopolitical risks, which will continue to drive demand. 

Additionally, the US Federal Reserve's anticipated interest rate cuts are expected to weaken the US Dollar, making gold more attractive as a non-yielding asset. Geopolitical tensions and inflation concerns add to gold's appeal as a less risky investment. With forecasts suggesting gold could reach $3,000 per ounce or higher by the end of 2025, the outlook for the precious metal remains bullish.