Gold’s upward momentum will continue in the short to medium term in 2025 with the macro backdrop likely to remain favourable. Interest rates drop and diversification of foreign-reserve will continue amid geopolitical tensions, creating a platform for gold to rise, say analysts.

“Gold’s rally is not over yet,” said ING Think, the economic and financial analysis wing of Dutch multinational financial services firm ING. 

“We forecast gold prices to average at $2,500/oz in 2025. We believe that prices will still be supported in the coming months, but with little to no further upside,” said research agency BMI, a unit of Fitch Solutions.

The Australian Office of the Chief Economist (AOCE) said gold prices will remain elevated in 2025 before falling slightly in 2026. “Safe-haven demand for gold has helped drive strong gold price gains in 2024,” it said. 

Fed policy’s pace

ING Think said the main question for the gold market now is the pace at which the Fed will ease its policy following Donald Trump’s win in the US presidential election; the inflationary impact of Trump’s policies could lead to fewer rate cuts than previously expected.

BMI said interest rate cuts hold the key to interest in gold, as lower bond yields would divert investment into the non-yielding yet haven asset. “With Trump’s victory, the resilience of the US economy in 2025, combined with the potential for higher inflation via tariffs, will likely see the Fed take a more cautious approach to interest rate cuts,” it said.

AOCE said gold’s traditional inverse relationship with the dollar has weakened, with both gold prices and dollar values rising. This trend is expected to continue in 2025.

ING Think said its economist sees a pause in interest rate cuts by the US Fed. “Rather than cutting rates by 50 basis points per quarter, he (the economist) now favours 25 basis points per quarter from the first quarter of 2025, with rates perhaps bottoming higher than he previously thought at 3.75 per cent in the third quarter of 2025,” it said. 

Central banks’ purchases

BMI said its global team has forecast that the Fed will cut interest rates by a cumulative 125 basis points to  3.50 per cent by the end of 2025. “However, the pace and magnitude of cuts will be determined by the incoming inflation, labour and economic activity data, on which the Fed remains very dependent,” it said. 

The research agency said its forecast was “slightly more dovish” than the market implied rates, which suggest that the Fed will cut interest rates to between 3.75 per cent and 4 per cent by the end of 2025.

The Australian Office of the Chief Economist said central bank gold purchases are expected to continue at the decreased September quarter levels in 2025 as some countries are looking to diversify their foreign reserves.  

ING Think expects central banks to remain buyers due to geopolitical tensions and the economic climate. It said inflows into exchange traded funds (ETFs) should continue as the Federal Reserve continues to cut rates. 

Trump’s policies impact

BMI said inflation will continue to ease in 2025, indicating that gold demand as a hedge against inflation will slow as well. It said its Political Risk team thinks Donald Trump’s return to the US presidency portends a substantial increase in global trade tensions, with Trump likely to focus on economies running sizable trade surpluses with the US, including China, Mexico, the EU, Vietnam and Japan. 

“In terms of geopolitics, multiple flashpoints remain, including the Russia-Ukraine war, the conflict in the Middle East and North Africa, and worsening relations in the Taiwan Strait,” the research agency said.

ING Think said in the longer term, Trump’s proposed policies – including tariffs and stricter immigration controls, which are inflationary in nature – will limit interest rate cuts from the Federal Reserve. “A stronger dollar and tighter monetary policy could eventually provide some headwinds to gold,” it said. 

AOCE said the demand for gold jewellery in Asia is expected to rise as the year turns, as the wedding season in China and India commences in November 2024 and finishes in February 2025.  

BMI said it is now bearish towards gold and expects prices to range between $2,200/oz and $2,600/oz over Q4 2024 to Q1 2025. ING Think sees prices averaging $2,760/oz in 2025.

The Australian Office of the Chief Economist said the gold price in 2026 is expected to fall by 8.7 per cent to average nearly $2,300 an ounce.