The gold market is positioned for another year of growth in 2025, though analysts caution that the rate of increase is likely to moderate compared to last year’s stellar performance. After surging by an impressive 27% in 2024—its strongest annual gain since 2010—gold is projected to climb an additional 7% by year-end, reaching approximately $2,795 per troy ounce, according to an average forecast by leading banks and refiners.
Central Banks Fueling Demand
A key driver of this sustained rally is robust purchasing by global central banks. Since the imposition of US sanctions on Russia following its 2022 invasion of Ukraine, central banks have been actively diversifying their reserves away from the dollar. This trend is expected to continue underpinning demand for the yellow metal.
Henrik Marx, global head of trading at Heraeus Precious Metals, highlighted central bank activity as a crucial pillar of support. “We think central bank interest will be a strong base for buying next year,” he noted. Heraeus has forecast that gold prices could peak at $2,950 per troy ounce in 2025.
Economic and Geopolitical Tailwinds
Interest rate cuts by the US Federal Reserve and mounting concerns over US government debt levels under President-elect Donald Trump are also bolstering gold’s appeal. The political landscape—marked by ongoing conflicts in the Middle East and Ukraine—adds further momentum.
“Whatever Trump announces will likely increase debt, leading to a weaker dollar and higher inflation,” Marx observed. “That is usually a favourable mix for gold.”
The World Gold Council’s latest report supports this outlook, predicting growth in demand to remain “positive but much more modest” compared to 2024.
Divergent Forecasts
The bullish sentiment is echoed by Goldman Sachs, which anticipates prices reaching $3,000 by the end of 2025. In contrast, more conservative projections from Barclays and Macquarie foresee a potential decline to around $2,500 per troy ounce—a 4% drop from current levels.
“Our base case into 2025 is for gold to initially face pressure from US dollar strength but to find support from improved physical buying and steady official sector demand,” Macquarie analysts wrote in their year-end outlook.
Factors to Watch
Central bank purchases remain a pivotal factor. Notably, global central banks accumulated 694 tonnes of gold during the first nine months of 2024. The People’s Bank of China resumed its gold purchases in November following a six-month pause.
Meanwhile, the Federal Reserve’s interest rate policy could play a decisive role. While lower interest rates have historically benefited gold—a non-yielding asset—the pace of further cuts is expected to be gradual. Gold prices dipped slightly after the Fed’s December rate cut but remain buoyed by expectations of a slower borrowing cost trajectory in 2025.
The Trump Effect
Trump’s electoral victory in November has created a highly favourable environment for gold. Increased fiscal spending and heightened geopolitical uncertainty have strengthened its appeal as a safe-haven asset. “Momentum is taking back over, combined with geopolitical tensions, which is going to add more fuel to the fire,” remarked Michael Haigh, head of commodities research at Société Générale. Haigh predicts prices will reach $2,900 by the end of 2025.
Looking Ahead
For members of Bullion Club, 2025 promises to be a pivotal year for gold investment. With central bank demand, geopolitical dynamics, and economic policies aligning to bolster prices, the yellow metal remains a compelling asset. However, as always, market participants should remain vigilant, balancing optimism with cautious analysis.
