The price of gold continues to rise in 2025! How high will it go in 2025?

Over the past two years, the spot gold price has increased by about 50%. Additionally, this year, a series of positive factors have supported it as the spot gold price hit a historical high of $2,788.5 per ounce on October 30th.

Goldman Sachs points out that gold will be the most noteworthy commodity in 2025. Goldman Sachs and Bank of America mention that, against the backdrop of uncertainty in the macro economy and risk aversion, it is the "best trade" facing inflation and geopolitical risks.
Goldman expects the price of gold to rise to $3,000 per ounce by the end of 2025, while Bank of America predicts surpassing $3,000 in the second half of 2025.Structural factors driving the increase in gold prices include rising demand from central banks, and cyclical factors include interest rate cuts by the Federal Reserve. The main risks are rising interest rates and a stronger US dollar.UBS also highlighted that gold is currently trading at levels higher than its "fair value", but with the increasing global risk aversion and the need for diversified investments, this premium is seen as rational, making gold a more attractive presence in investment portfolios. The bullish outlook is primarily driven by three reasons.In 2025, the gold price outlook.UBS also emphasized that gold is currently trading at levels higher than its 'fair value', but with the increasing global risk aversion and the need for diversified investments, this premium is seen as rational, making gold a more attractive presence in investment portfolios. The bullish outlook is primarily driven by three reasons.

In 2025, the gold price forecast.

●The sharp increase in demand for gold by central banks
After the escalation of the Russia-Ukraine conflict in 2022, the demand for gold by central banks worldwide has significantly increased, with gold reserves being used to respond to financial sanctions and debt risks. Additionally, due to concerns about the US debt crisis, central banks may also increase their gold reserves.

According to data compiled by Goldman Sachs, the demand for gold by central banks has already expanded fivefold compared to 2020. This trend is expected to continue for the next few years, bringing a solid upward trend in gold prices.

●Tailwinds from the FRB rate cut
Goldman Sachs predicts that the Federal Reserve will reduce the federal funds rate to the range of 3.25% to 3.5% by 2025, expecting a 7% increase in the price of gold by December next year, and anticipating a gradual increase in ETF gold holdings.

●Market risk-avoidance posture is pushing up.
Goldman views gold as the most attractive asset against tail risks such as higher tariffs, escalating geopolitical risks, and concerns about a US bond default. In times when market concerns about the intensification of trade frictions and the sustainability of fiscal policies are high, there is a possibility that the price of gold could rise further.。

What impact does President Trump's inauguration have on the price of gold?
Bank of America economist Claudio Irigoyen stated that President Trump's economic policies mainly focus on trade, immigration, fiscal policy, and regulatory easing. Since the scale and implementation plans of the policies are still unclear, there is also uncertainty about their effects on economic growth, inflation, and monetary policy.

●In Case 1, with regulatory easing and fiscal balance, the dollar has a slightly strong bias, leading to a decrease in gold prices.
In this scenario, Trump 2.0 will focus on growth policies, including regulatory easing, proactive tax cuts, securing a balanced budget through fiscal expenditure reductions, and softening tariffs and immigration regulations that hinder economic growth.

Real interest rates and inflation expectations are rising globally, the dollar is slightly stronger, prices are somewhat lower, and the expected economic growth rate in the USA exceeds 3%. Additionally, the Federal Reserve Board is expected to keep interest rates unchanged or raise them.

●In Case 2, there is a significant increase in tariffs, raising the risk of an economic downturn.
Trump 2.0's deregulation plan is slowing down, fiscal stimulus remains minimal, and only some parts of the tax cut plan are expected to be implemented. Investors are starting to factor in interest rate increases due to concerns about the US government debt. As for trade policy, the US government is actively pushing forward an aggressive tariff policy involving a significant increase in tariff rates, strict immigration policies, and a potential acceleration of outflow of immigrant labor force.

While tariff increases may temporarily push up inflation, the Federal Reserve Board is expected to implement significant interest rate cuts due to concerns about economic growth, leading to a decrease in long-term inflation expectations. This is a positive development for the price of gold.。

●In case 3, the USA is facing stagflation issues, with the dollar weakening across the board, providing tailwinds for gold and cryptocurrencies.
Tail risks are accumulating, geopolitical risks are intensifying, and the US economy is falling into stagflation. The Federal Reserve Board (FRB) is introducing yield curve control, keeping real interest rates at a low level, but long-term inflation and expected inflation rates are sharply rising. The status of the dollar as the key currency is being questioned, and it is believed that gold and cryptocurrencies will benefit.

●Regulatory easing.Extensive deregulation, including in the energy and financial services sectors, could act as a tailwind for economic growth and potentially raise interest rates.

●Tariffs by Trump After President Trump's inauguration, there is a high possibility of a significant increase in tariffs on other countries in the short term. If the currencies of emerging countries come under tariff pressure, there are concerns that the incentive for central banks of emerging countries to buy gold will be lost.

●The Fed's decision to postpone rate cuts If the economic foundation remains strong and a significant tariff increase is announced, there is a possibility that the Fed will pause rate cuts. Additionally, stricter immigration regulations could potentially lead to further inflation.

●Mitigation of geopolitical risks Parties involved in both the Russia-Ukraine conflict and the Israel-Lebanon conflict have indicated their intention to negotiate. As geopolitical tensions ease, risk assets including US stocks rise, and the attractiveness of gold as a safe asset decreases.

●The weakening of gold demand in China.Against the background of policies supporting the economy and the rapid recovery of the stock market, gold demand in China is slowing down.

●The alternative effect of Bitcoin.Mr. Trump's victory may relax regulations on cryptocurrencies. There is a possibility that speculative funds flowing into gold may partially shift to the cryptocurrency market.