Gold prices have continuously hit new highs this year, making it one of the best investment options. Wall Street believes that gold prices will further climb in 2025.
In 2024, the price of gold rose by 27%, reaching $2,617.20 per ounce, surpassing the 25% increase of the S&P 500 index and closely trailing the 31% increase of the tech-heavy Nasdaq Composite Index.
According to The Wall Street Journal, analysts from JPMorgan Chase, Goldman Sachs, and Citigroup all predict that the price of gold will reach $3,000 in 2025.
David Tait, CEO of the World Gold Council, told CNBC tv18 that by 2025, gold prices could reach $3,000 per ounce, reflecting strong demand from major economies such as Japan, China, and India. He anticipates that driven by central banks and geopolitical factors, gold prices will continue to rise.
Patrick Yip, Senior Director of Business Development at the American Precious Metals Exchange, told CBS News’ “Money Watch” in July that if geopolitical uncertainty persists, interest rates are lowered, or global central banks increase their gold purchases, gold could potentially reach $3,000 per ounce next year.
The Wall Street Journal summarized five main reasons that will continue to drive the rise in gold prices next year, including Fed rate cuts and geopolitical risks.
Although the Fed has not publicly announced a rate cut plan for 2025, investors generally expect further rate cuts next year. Lower interest rates often weaken the dollar, making it cheaper for international buyers to purchase gold, thus increasing demand. Higher demand will further drive gold prices.
Analysts predict that disappointed with falling yields, a portion of the $6.7 trillion held in currency market funds will flow into exchange-traded funds (ETFs) that hold gold, such as SPDR Gold Shares. Greg Shearer, Head of Precious Metals Strategy at JPMorgan Chase, said, “This is the most bullish part of the gold cycle.”
In addition to potential rate cuts by the Fed, geopolitical risks will also drive gold prices higher in 2025. During periods of heightened global conflict, investors often turn to safe-haven assets like gold.
As we approach 2025, uncertainties remain regarding the end of the Russia-Ukraine conflict in Europe and the ongoing conflict in the Middle East. Moreover, the inflation risks posed by Trump’s tariffs are making investors uneasy.
China’s slowing economy and depressed stock market, along with threats of increased tariffs on Chinese goods after Trump’s upcoming tenure next year, have fueled Chinese investors’ recent enthusiasm in purchasing gold.
According to reports, central banks worldwide, especially those from countries with strained relations with the West, have been aggressively acquiring gold. Goldman Sachs noted that China has been a significant source of demand, with official gold reserves more than doubling since 2008.
Following Russia’s full-scale invasion of Ukraine in 2022 and subsequent Western sanctions, some central banks have moved away from dollar-denominated assets in favor of gold.
A report from the World Gold Council released in June revealed that in a survey conducted from February to April 2024, 29% of central banks interviewed had expressed intentions to increase their gold reserves in the next 12 months, the highest proportion since the surveys began in 2018.
Reports suggest that the upward trend in gold prices tends to be enduring. Over the past six years, gold futures prices have risen by at least 20% in five of those years, with prices climbing again the following year. Citigroup analysts stated that during these five years, the average price increase exceeded 15%.
Another advantage of gold is its low industrial demand. This means that in times of economic slowdown (such as a potential escalation in the US-China trade war), the impact on gold demand would not be as significant as for other precious metals like silver and platinum, which have industrial applications. This also adds to the attractiveness of gold investment.
(Note: The content of this article is for general informational purposes only and should not be considered as recommendations. The Epoch Times does not provide investment, tax, legal, financial planning, or other personal financial advice. For specific investment matters, please consult your financial advisor. The Epoch Times does not assume any investment responsibility.)