Gold Price Rally Expected to Continue Through 2025, According to Major Banks
Major banks are projecting that the record-breaking price rally of gold will continue into 2025, driven by a resurgence in large inflows to exchange-traded funds (ETFs) and anticipated interest rate cuts from prominent central banks worldwide, including the U.S. Federal Reserve.
Goldman Sachs has reiterated its long gold recommendation, citing lower global interest rates, increasing central bank demand, and gold's hedging benefits against geopolitical, financial, and recessionary risks. Analysts at the bank predict that about 2/3 of the expected rise in the gold price to $2,900 per ounce in early 2025 will be driven by moderate but still significant central bank purchases on the London OTC market, with the remaining 1/3 coming from the gradual rise in ETF flows following Fed rate cuts.
This year, non-yielding gold has surged by over 28%, reaching nearly $577 an ounce, positioning itself as one of the standout assets of 2024. The precious metal hit a record high of $2,685.42/oz last week and has achieved multiple record highs throughout the year. J.P. Morgan analysts highlight strong physical demand from China and central banks as key factors supporting gold prices, emphasizing that investor flows, particularly retail-focused ETF builds, will be crucial for a sustained rally during the upcoming Fed cutting cycle.
The Federal Reserve initiated an easing cycle in September, cutting rates by half a percentage point and projecting further cuts by the end of this year and next year. In a low interest rate environment and amid geopolitical turmoil, zero-yielding bullion tends to be a preferred investment.
Analysts anticipate that the U.S. presidential election in November could drive further increases in gold prices, as potential market volatility may lead investors towards safe-haven assets like gold.
Looking ahead, various brokerages have provided price forecasts for gold in 2024 and 2025, with targets ranging from $2,339 to $3,000 per ounce. These forecasts indicate a bullish outlook for gold in the coming years, with potential for further gains driven by central bank demand, investor flows, and geopolitical factors.
In summary, the outlook for gold remains positive, with major banks and brokerages projecting continued price increases through 2025. Investors may consider adding gold to their portfolios as a hedge against risks and uncertainties in the global economy, especially in a low interest rate environment.