Gold is set to continue this year, say Wall Street banks

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The price of gold is expected to rise further in 2025, say Wall Street analysts, although the pace of gains is likely to slow after last year’s massive 27% rally.

Gold it is expected to rise to $2,795 per troy ounce by the end of the year, according to a common web of banks and refiners surveyed by the Financial Times. That’s about 7 percent more than current levels.

The yellow metal is expected to continue to benefit from global buying central bankswhich have been diverging from the dollar since the US imposed sanctions on Russia following its 2022 full-scale invasion of Ukraine.

Interest rate cuts by the US Federal Reserve, concerns about growing US government debt under president-elect Donald Trump and conflicts in the Middle East and Ukraine are also expected to raise prices. Such factors are responsible for bullion’s biggest annual gain since 2010 last year.

“We think the central bank’s interest rate will be a solid basis for buying next year,” said Henrik Marx, head of global trading at Heraeus Precious Metals, who predicted that gold could reach higher to $2,950 per troy ounce this year.

He added that the second term of Trump’s presidency could also support gold prices. “Anything he announces will increase debt, which leads to a weaker dollar and higher inflation. That’s usually a good combination for gold.”

The World Gold Association said in a report that this year’s growth will be “good but more moderate”.

The biggest call among those analyzed comes from Goldman Sachs, which expects prices to reach $ 3,000 at the end of 2025. The bank cites the demand of the central bank and the rate cut expected by the Fed.

The strongest forecasts came from Barclays and Macquarie, both of which expect gold to sink to around $2,500 a troy ounce by the end of the year – about 4 per cent from current levels .

“Our base case in 2025 is that gold will begin to face continued pressure from the strength of the US dollar, but it will be supported by improved physical prices and stable demand from the official sector,” it said. wrote Macquarie analysts in their year-end outlook.

The world’s central banks bought 694 tons of gold during the first nine months of 2024. The People’s Bank of China announced in November that it is continuing to buy gold after a months-long hiatus. six.

Falling US interest rates contributed to the gold rally in the second half of last year, and the pace of the decline could be important to the outlook for the yellow metal. Gold prices rebounded slightly after the Fed cut rates in December but indicated that borrowing costs will fall more slowly than previously expected in 2025.

Because gold is a non-yielding asset, it often benefits from low interest rates, because the opportunity cost of holding it is low.

Trump’s election win in November has provided one of the best conditions for gold, given the possibility of higher US spending and climate uncertainty, said Michael Haigh, head of property research at Société Générale.

“Problems are coming back, combined with political tensions, will add fuel to the fire,” said Haigh, who expected gold prices to rise to $2,900 per troy ounce by the end of 2025.