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The World Gold Council predicts that the gold price will increase steadily from its current levels during 2025, effectively saying that it has established a new floor of solidly above US$2 400 per ounce.
The organisation, along with several other pundits, says that global uncertainties remain worrisome enough to fuel continued investment.
If things go well and economies improve, there will also be healthy demand for gold trinkets, investment bars, and coins.
“Gold is poised for its best annual performance in more than a decade,” the World Gold Council said of the 28 percent increase through November, even though the price fell back to below US$2 600 during the last two weeks.
“Central bank and investor buying have more than offset a notable deceleration in consumer demand.
“Asian investors have been a near constant presence, while lower yields and a weakening dollar in the third quarter fuelled Western investment flows.
“However, it is gold’s role as a hedge amidst rising market volatility and geopolitical risk that most likely explains its remarkable performance (during 2024),” the organisation says in a recent report.
“As we look forward, all eyes are focused on what Trump’s second term may mean for the global economy.
“Thrill-seeking investors may benefit from an early wave of risk-on flows, but potential trade wars and inflationary forces may spill over into an expected subpar economic growth.
“The market consensus of key macro variables such as GDP, yields and inflation — if taken at face value — suggests positive, but much more modest growth for gold in 2025.
“Upside could come from stronger than expected central bank demand, or from a rapid deterioration of financial conditions leading to flight-to-quality flows. Conversely, a reversal in monetary policy, leading to higher interest rates, would likely bring challenges,” it says.
The World Gold Council expects China’s contribution to the gold market will be key, either when consumers buy gold jewellery if the economy reacts to China’s recent economic stimuli or demand from investors if the economic outlook sours.
“Consumers have been on the sidelines while investors have provided support. But these dynamics hang on the direct (and indirect) effects of trade, stimulus and perceptions of risk,” it says.
The World Gold Council notes that the average gold price increased by approximately 22 percent in US dollars and euros, more than 31 percent in yen, and a massive 68 percent in Turkish lira from the beginning of 2024 to the end of November.
“Gold remains one of the best performing assets of the year.”
Gold reached 40 new record highs during 2024, and total gold demand in the third quarter surpassed US$100 billion for the first time ever. Investment demand, especially through over-the-counter transactions, was supported by an undercurrent of geopolitical risk and volatility in many regional financial markets.
Central banks continued to add gold to reserves during the year, with buying picking up speed in early October. For most of the third quarter, Western investors flocked back to gold as central banks started cutting interest rates.
The World Gold Council says all eyes will be on the US in 2025.
“Trump’s second term may provide a boost to the local economy but could equally elicit a fair degree of nervousness for investors around the world.
“Trump starts his second term in late January but the US stock market is already banking on a pro-business agenda with a near 7 percent increase since early November.
“Tech stocks (and the Magnificent 7) have done even better.
“A more business-friendly fiscal policy combined with an America-first agenda is likely to improve sentiment among domestic investors and consumers.” — Moneyweb
Online Reporter