Gold’s Shining Future: Analysts Predict Continued Rally in 2025
As the new year begins, gold is poised to continue its upward trajectory, driven by expectations of further Federal Reserve interest rate cuts and increased bullion purchases by foreign central banks. On Thursday, gold futures surged over 1% to reach a high of $2,670 an ounce, their highest level since mid-December.
A Year of Growth
Despite a brief stall following the 2024 US presidential election, gold closed out the year with an impressive gain of over 27%, outperforming the S&P 500’s 23% increase. This significant growth has analysts predicting a continued rally in 2025.
Bullish Outlook
JPMorgan analysts are maintaining their multi-year bullish outlook on gold, citing the precious metal’s ability to hedge against uncertainty in the macro landscape. They forecast gold will rise towards $3,000 per ounce this year. Similarly, Goldman Sachs analysts predict bullion will reach $3,000 by the end of 2025, driven by continued central bank purchases.
Central Banks’ Role
Emerging markets’ central banks are expected to continue buying gold as a hedge against financial and geopolitical shocks. Goldman Sachs sees gold rising to $3,050 if central banks purchase more bullion than expected. However, prices could stall at $2,900 if the Federal Reserve decides to only cut interest rates one more time this year.
Interest Rates and Inflation
Recent sticky inflation prints have raised questions about the pace of interest rate cuts. Economists believe some Trump administration policies, such as higher tariffs, could drive up inflation. If the Fed lowers rates at least two more times, retail investors may be pulled from the sidelines, seeking to preserve wealth and hedge their portfolios.
Retail Investors’ Role
According to Steven Feldman, co-founder and CEO of GBI, a physical precious metals platform, retail investors in the US did not participate significantly in 2024. However, if interest rates decrease or inflation picks up, he expects US investor retail flows to increase, supporting gold prices.
A Bright Future Ahead
As gold continues to shine, analysts are confident in its ability to maintain its upward momentum. With central banks and retail investors driving demand, gold is poised to reach new heights in 2025.
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