The Financial Times recently reported that Wall Street analysts have stated that gold prices will further rise in 2025. However, after a 27% surge last year, the pace of gold price increase may slow down.

(Screenshot source: Financial Times)

According to the average forecast of banks and refiners surveyed by the Financial Times, gold prices are expected to climb to around $2795 per ounce by the end of 2025. This is about 6% higher than the current level.

It is expected that gold will continue to benefit from global central bank purchases. Since the United States imposed sanctions on Russia following the outbreak of the Russo Ukrainian War in 2022, global central banks have been reducing their dependence on the US dollar and diversifying their assets.

The Federal Reserve's interest rate cuts, concerns over the rising debt levels of the US government under the leadership of President elect Donald Trump, and conflicts in the Middle East and Ukraine are also expected to push up gold prices. These factors are the reasons for the largest annual increase in gold prices since 2010 last year.

Henrik Marx, Global Head of Trading at Heraeus Precious Metals, said, "We believe that central bank interest rates will be a strong foundation for buying next year

Heraeus predicts that gold prices may reach a high of $2950 per ounce this year.

Marx added that Trump's second presidential term may also provide support for gold prices. No matter what Trump announces, it will increase debt, leading to a depreciation of the US dollar and worsening inflation. This is usually a combination factor that benefits gold

The World Gold Council stated in a report that gold prices will rise this year, but the increase will be much milder.

The most bullish forecast in the Financial Times survey comes from Goldman Sachs, which predicts that gold prices will reach $3000 per ounce by the end of 2025. Goldman Sachs cited central bank demand and expectations of a rate cut by the Federal Reserve.

The most bearish predictions come from Barclays and Macquarie, both of which predict that gold prices will fall to around $2500 per ounce by the end of this year.

Our basic forecast for 2025 is that gold will initially face sustained pressure from a strengthening US dollar, but will be supported by increased physical purchases and stable demand from official sectors, "wrote Macquarie analysts in their 2024 year-end outlook

Global central banks purchased 694 tons of gold in the first nine months of 2024. The People's Bank of China announced last November that it would resume buying gold after a six-month break.

The decline in US interest rates contributed to the rebound of gold in the second half of last year, and the pace of further interest rate cuts may be crucial for the prospects of gold. After the Federal Reserve cut interest rates in December last year but indicated that the rate of decline in borrowing costs in 2025 would be slower than previously expected, gold prices slightly fell.

As gold is a non yielding asset, it typically benefits from lower interest rates as the opportunity cost of holding gold is lower.

Michael Haigh, head of commodity research at Soci é t é G é n é rale, said. Trump's victory in last November's election provided one of the most favorable prospects for gold, as US fiscal spending may increase and geopolitical uncertainty increases

Haigh expects gold prices to rise to $2900 per ounce by the end of 2025.