Gold Price Rally Expected to Continue into 2025, Major Banks Predict
Major banks are anticipating that the record-breaking rally in gold prices will extend into 2025. This projection is based on a resurgence in large inflows to exchange-traded funds (ETFs) and the anticipation of additional interest rate cuts from prominent central banks worldwide, including the U.S. Federal Reserve.
We reiterate our long gold recommendation due to the gradual boost from lower global interest rates, structurally higher central bank demand and gold’s hedging benefits against geopolitical, financial, and recessionary risks,” noted Goldman Sachs in a recent statement.
Analysts at Goldman Sachs believe that moderating central bank purchases on the London OTC market could drive about 2/3 of the expected rise in gold prices to $2,900 per ounce in early 2025. The remaining 1/3 of the price upside is expected to be driven by the gradual increase in exchange-traded fund flows following the Fed rate cuts.
Gold, a non-yielding asset, has seen an increase of nearly $577 per ounce, or over 28%, so far this year. This growth positions gold as one of the standout assets of 2024, on track for its biggest annual rise since 2010. The precious metal hit a record high of $2,685.42/oz last week and has reached record highs multiple times this year.
“Strong physical demand from China and central banks supported gold prices over the past two years, but investor flow, and retail-focused ETF builds in particular, continue to hold the key to a further sustained rally over the upcoming Fed cutting cycle,” analysts at J.P. Morgan added in a note on Sep. 23.
With the Fed beginning its easing cycle in September and further cuts expected, zero-yielding bullion becomes a preferred investment in a low-interest-rate environment and during geopolitical turmoil. The upcoming U.S. presidential election in November could also drive investors towards safe-haven gold amidst potential market volatility.
Analysts at various brokerages have provided forecasts for gold prices in 2024 and 2025. These forecasts range from $2,339 to $2,973 for 2024 and $2,600 to $3,000 for 2025, indicating a positive outlook for gold in the coming years.
In conclusion, the projected extension of the gold price rally into 2025 presents an opportunity for investors to capitalize on the precious metal’s potential growth. With factors such as interest rate cuts, central bank demand, and geopolitical uncertainty driving the market, gold remains a strong asset with the potential for further gains in the future.