Gold wrapped up 2024 with its most significant yearly increase in 14 years, and Wall Street analysts predict the precious metal’s rally will continue into 2025. On Thursday, gold futures surged by over 1%, pushing prices above $2,670 per ounce — the highest level since mid-December. Investors are optimistic about the new year, anticipating additional interest rate cuts by the Federal Reserve and increased bullion purchases by central banks.
Despite a brief slowdown following Donald Trump’s victory in the November elections, gold managed to close the year with an impressive 27% gain, outperforming the S&P 500’s 23% increase.
Looking ahead to 2025, analysts at JPMorgan reiterated their bullish outlook on gold for the third consecutive year. They cited gold’s potential to hedge against ongoing macroeconomic uncertainties, particularly as the U.S. enters the early stages of the Trump administration. JPMorgan forecasts that gold could rise toward $3,000 per ounce in the year ahead.
Goldman Sachs analysts share a similar outlook, predicting that gold will reach $3,000 by the end of 2025, driven by continued central bank buying, especially in emerging markets. In a note released last month, the analysts explained that central banks in emerging economies typically increase their gold reserves as a safeguard against financial and geopolitical instability. Goldman also suggested that if central banks increase their purchases more than expected, prices could surge to $3,050. However, if the Federal Reserve opts for only one additional interest rate cut, gold’s price might plateau at around $2,900.
The outlook for gold also depends on how quickly the Federal Reserve can manage inflation, which has remained persistently high. Some of the Trump administration’s proposed policies, such as raising tariffs, could accelerate inflation, further supporting gold’s appeal as a hedge.
Retail investors, who largely sat on the sidelines in 2024, may also drive demand if the Fed implements additional rate cuts. According to Steven Feldman, co-founder and CEO of GBI, a platform for physical precious metals, if interest rates drop or inflation accelerates, U.S. retail investors may begin to invest in gold to preserve their wealth. “If interest rates were to decrease a bit, or there’s more pickup in inflation or stagflation, I think U.S. retail investor flows should be good, and that will be supportive for gold prices,” he told Yahoo Finance.
With multiple factors poised to support gold, analysts are forecasting a strong 2025 for the precious metal, further reinforcing its status as a key asset in times of economic uncertainty.
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