Gold prices are expected to continue their upward trajectory in 2025, though at a slower pace compared to last year's remarkable 27% rally. Analysts anticipate a 7% increase from current levels by the end of the year, signaling a more moderate yet steady rise.
What Happened: Wall Street analysts project that gold prices will climb to about $2,795 per troy ounce by the end of 2025, a 7% increase from current levels, Financial Times reported on Thursday. This forecast comes on the heels of significant central bank purchases, which saw global institutions buy 694 tonnes of gold in the first nine months of 2024.
Key drivers of the expected increase include central banks' diversification away from the U.S. dollar following sanctions on Russia, anticipated interest rate cuts by the U.S. Federal Reserve, and rising concerns about U.S. government debt under President-elect Donald Trump.
Henrik Marx, global head of trading at Heraeus Precious Metals, said, “Whatever he announces will increase debt, leading to a weaker dollar and increased inflation. That is usually a nice mixture for gold."
Geopolitical tensions in the Middle East and Ukraine are also contributing to the bullish outlook for gold.
Notably, Goldman Sachs has issued the most optimistic forecast, expecting prices to hit $3,000 per troy ounce by year's end. Meanwhile, Barclays and Macquarie have issued more conservative projections, predicting a drop to approximately $2,500 per troy ounce, a 4% decline from current levels.
"Momentum is taking back over, combined with geopolitical tensions, which is going to add more fuel to the fire," said Michael Haigh, head of commodities research at Société Générale. Haigh predicts that gold prices could reach $2,900 per troy ounce by the end of 2025.
Why It Matters: Gold's role as a safe-haven asset remains prominent amid global economic uncertainties and geopolitical tensions. Central banks have been increasingly diversifying their reserves, moving away from the dollar to mitigate risks. The World Gold Council has described this year's growth as "positive but much more modest" compared to 2024.
However, the rise of alternative assets like Bitcoin ETFs is also reshaping the investment landscape. Investors are exploring new safe-haven options, potentially challenging gold's dominance in this space. The interplay between traditional and emerging assets will be a critical trend to watch in 2025.
Price Action: As per Benzinga Pro, gold ETFs have increased in the past one year, as of Tuesday, 31st Dec. SPDR Gold Shares GLD was up by 26.85%, iShares Gold Trust IAU was rose by 26.85% and abrdn Physical Gold Shares ETF SGOL was up by 26.90%. Meanwhile, Barrick Gold Corporation GOLD fell by 14.32% over the year, Newmont Corporation NEM dropped by 10% while Royal Gold, Inc. RGLD increased by 9%.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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