Gold Price Rally Expected to Continue into 2025 - Analysts
Major banks are anticipating that the record-breaking rally in gold prices will extend into 2025, driven by large inflows to exchange-traded funds (ETFs) and expectations of further interest rate cuts from central banks like the U.S. Federal Reserve. According to analysts at J.P. Morgan, strong physical demand from China and central banks has supported gold prices in recent years, but investor flow, particularly in retail-focused ETFs, will be crucial for a sustained rally during the upcoming Fed cutting cycle.
Gold, a non-yielding asset, has already surged by over 27% this year, reaching nearly $570 an ounce and positioning itself as one of the top-performing assets of 2024. The precious metal hit a record high of $2,639.95/oz and has achieved multiple record highs throughout the year. Analysts at UBS believe that despite its strong performance, gold still has room to grow in the next six to 12 months, with large inflows to ETFs being a key factor for its future rise.
The Fed has already initiated an easing cycle with a half-percentage-point rate cut, and is expected to implement further cuts by the end of this year and next year. In a low interest rate environment and during times of geopolitical uncertainty, zero-yielding assets like gold become preferred investments.
The upcoming U.S. presidential election on Nov. 5 could also contribute to higher gold prices, as potential market volatility may drive investors towards safe-haven assets like gold.
Here are some price forecasts for gold in 2024 and 2025 from various brokerages:
- Commerzbank: $2,600 for mid-2025
- ANZ: $2,394 for 2024, $2,805 for 2025
- Macquarie: $2,339 for 2024, peak of $2,600/oz in Q1 2025
- Goldman Sachs: $2,700 by early-2025
- UBS: $2,700 by mid-2025
- BofA: $2,365 for 2024, $2,750 for 2025
- J.P. Morgan: $2,398 for 2024, $2,775 for 2025
- Citi Research: $2,360 for 2024, $2,875 for 2025
Overall, the outlook for gold remains positive, with analysts and major banks expecting the rally to continue into 2025. Investors should consider adding gold to their portfolios as a hedge against market volatility and as a potential source of strong returns in the coming years.