Gold set to rally additional this yr, say Wall Street banks | USAEMALL.com

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The price of gold is set to rise further in 2025, say Wall Street analysts, although the pace of gains is likely to slow after last year’s bumper 27 per cent rally.

Gold is expected to climb to about $2,795 per troy ounce by the end of the year, according to the average forecast by banks and refiners surveyed by the Financial Times. That is about 7 per cent above current levels.

The yellow metal is expected to continue to benefit from buying by global central banks, which have been diversifying away from the dollar since the US imposed sanctions on Russia following its 2022 full-scale invasion of Ukraine.

Interest rate cuts by the US Federal Reserve, concerns about growing US government debt levels under president-elect Donald Trump and conflicts in the Middle East and Ukraine are also forecast to lift prices. Such factors were behind bullion’s biggest annual gain since 2010 last year.

“We think central bank interest will be a strong base for the buying next year,” said Henrik Marx, global head of trading at Heraeus Precious Metals, which forecast that gold could touch highs of $2,950 per troy ounce this year.

He added that Trump’s second presidential term was also likely to be supportive for gold prices. “Whatever he announces will increase debt, leading to a weaker dollar and increased inflation. That is usually a nice mixture for gold.”

The World Gold Council said in a report that this year’s growth would be “positive but much more modest”.

The most bullish call among those surveyed is from Goldman Sachs, which expects prices to reach $3,000 by the end of 2025. The bank cites central bank demand and expected rate cuts by the Fed.

The most bearish forecasts were from Barclays and Macquarie, which both expect gold to sink to about $2,500 per troy ounce by the end of the year — a roughly 4 per cent drop from current levels.

“Our base case into 2025 is for gold to initially face ongoing pressure from US dollar strength, but be supported by improved physical buying and steady official sector demand,” wrote Macquarie analysts in their year-end outlook.

Global central banks bought 694 tonnes of gold during the first nine months of 2024. The People’s Bank of China announced in November that it was resuming gold purchases after a six-month hiatus.

Falling US interest rates have contributed to gold’s rally in the second half of last year, and the pace of further cuts could be crucial to the outlook for the yellow metal. Gold prices pulled back slightly after the Fed lowered rates in December but indicated that borrowing costs will fall more slowly than previously expected in 2025.

Because gold is a non-yielding asset, it typically benefits from lower interest rates, because the opportunity cost of holding it is less.

Trump’s election win in November has provided one of the most favourable scenarios for gold, due to the likelihood of elevated US fiscal spending and increased geopolitical uncertainty, said Michael Haigh, head of commodities research at Société Générale.

“Momentum is taking back over, combined with geopolitical tensions, which is going to add more fuel to the fire,” said Haigh, who expected gold prices to rise to $2,900 per troy ounce at the end of 2025.