Gold could reach a record $3,000 per ounce in 2025, driven by economic and geopolitical risks, an analyst believes.
The ongoing conflict in Ukraine could strengthen gold’s safe-haven status as could concerns over the amount of debt developed economies are carrying, says Antonio Di Giacomo, a senior market analyst at XS, a broker.
Aside from short-term issues, structural trends also appear to support gold’s investment case. The energy transition could be one area driving demand given that the metal’s conductivity makes it crucial to generating power from renewable sources.
Also fueling the medium to long-term investment case is the trend to diversify portfolios towards more tangible assets. Then there are central banks, which could use the asset to stabilise their currency amid rising global uncertainty.
And the performance of the US economy, interest rates and what happens to the dollar will have more in uence on the price of gold in 2025 than they have had for years, added John Reade, a senior market strategist for Europe and Asia at The World Gold Council.
Gold’s value achieved several historic highs in 2024, growing by around a third to ultimately hit $2,777 per ounce at the end of October.
Yet investors ditched the precious metal on the day Donald Trump was elected back to the White House, sending it to $2,660 per ounce before staging a modest recovery.
As the election result became clear, the dollar strengthened by 1.7% – a sign that the market expects a stronger economy. Investors in the developing world have “probably been the biggest contributor to the strong gold price in the last couple of years”, Reade said.
Indeed, Asia, excluding the Middle East, accounted for 67% of global gold sales, the council’s third-quarter figures show.
That could change in the next 12 months. Reade said some investors have expressed near-term expectations of a stronger dollar, a wider US deficit and potentially stronger growth following the US presidential election and the Republicans taking control of the House of Representatives. “That’s been the trigger for the first correction we have seen in gold since it broke out in March,” he said.
Beyond the near term, the strength in gold since the first quarter tells Reade that an increasing number of long-term investors are concerned about the US debt situation. “I’m old enough to have heard these stories on and off for the last 40 years, but I’ve never heard them expressed so convincingly by such serious commentators,” he added.
“The US is running way too big a fiscal deficit for its position in the economic cycle,” Reade added. “Neither presidential candidate seemed to have any reasonable prospect of reducing that deficit. [Longer-term investors] are showing genuine concerns about the prospects of the US economy going forward,” he said.
Join the party
In the past few years, the performance of the US economy hasn’t had the impact on gold that Reade expected. Interest rates have been high and the dollar strong in the past 18 months, which usually puts gold under pressure, yet it traded at all-time highs in 2024.
He points to emerging market demand “probably” being the biggest contributor to the strong gold price in the last couple of years, be it central banks, retail investors in China or Turkey, or family offices and high-net-worth individuals in Asia.
“What I’ve been arguing, though, is that gold needs to see the Western investor, who has been mostly absent, or at least much diminished, from gold over the last couple of years, come to the party for gold to make further gains from here,” Reade said.
But he added that geopolitical risks are not enough on their own to entice these investors in. Wars in Europe and the Middle East have “lifted the gold price over the last year or two”, but they have not been a principal driver of demand, he said, not while the oil price is subdued.
“In my experience, geopolitical factors have a sustainment impact on the gold price when oil prices trade materially high- er, because then people start to worry about in ation and stag- ation and things like that,” he added.
Speaking to portfolio institutional before Trump announced his intention to slap tariffs on imports from Mexico, China and Canada,
Reade said that a blanket charge on imports from “unfavoured countries” could be bad for the US economy and therefore good for gold. “[Tariffs] would effectively act as a tax upon consumers,” he said. “It will push prices up, weaken economic activity and potentially push the US into recession.”
Not everyone agrees. Rania Gule, a senior market analyst at XS, issued a research note prior to Trump’s announcement. It read that a tariff on imports could push inflation higher as import costs rise. “In my view, this represents limited support for gold, as optimism for US economic growth dominates the overall picture.”
Nevertheless, we are still in an interest rate cutting environment, which is a good tailwind for the gold price, despite any economic changes enforced by the new president.
To conclude, Di Giacomo said gold looks set to be a strategic asset in 2025. Low interest rates, geopolitical tensions and structural trends should ensure its relevance as a safe and potentially profitable investment.
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