According to a report from Financial Associated Press on December 30 (Editor: Xiaoxiang), looking back on 2024, if there is any comparative trend across asset classes that can amaze people: then the rare "double prosperity" of Gold and the USA dollar is likely to occupy a prominent position...

As we introduced last Friday, the USA dollar is expected to achieve its strongest performance in nearly a decade this year—the Bloomberg Dollar Spot Index has increased by over 7.4% since the beginning of the year, the last time such an annual increase happened was in 2015. Moreover, while the USA dollar sets a record for annual increases over the years, perhaps even more astounding is Gold—because this year marks a record-breaking year for Gold priced in USA dollars!

In 2024, few investments are expected to perform better than Gold, which is about to迎来自2010年以来最为强势的一年, and one of the largest annual increases in history. Many gold bulls on Wall Street believe that gold prices are expected to rise further in 2025.

Data clearly tells a lot:

As of now in 2024, the price of NY gold futures has increased by 27%, reaching $2637 per ounce. This increase is higher than the S&P 500 Index's 25% rise this year and is not far off from the Nasdaq Composite Index's 31% annual increase, where Technology stocks are predominant.

From the year's trend, gold prices have remained strong throughout the year, only experiencing a slight decline after the USA election. Of course, this is expected since investors anxious about the election result may later shift funds back from safe havens to risk assets.

Currently, many Wall Street Institutions remain bullish on the gold price outlook for next year. Analysts from JPMorgan, Goldman Sachs, and Citigroup have set a target price of $3000 for gold next year. Moreover, from the following five main dimensions, these gold bulls seem to have optimistic reasons...

Global easing tide.

Currently, it is still difficult to assert how many times the Federal Reserve will cut interest rates in 2025. However, even if the Federal Reserve has halved its forecast for the number of rate cuts next year to two in the December dot plot, the rate-cutting cycle is still likely to continue for a while. At the same time, under the influence of potential external factors such as trade wars, other central banks around the world may also find it difficult to stop their rate cuts.

The lower the interest rates, the lower the opportunity cost of holding the interest-free asset, Gold.

Some Wall Street Analysts expect that as investors become disappointed with falling interest rates, a portion of the $6.7 trillion held in money market funds may flow into Gold ETFs—such as the world’s largest Gold ETF, SPDR Gold Shares (GLD).

Greg Shearer, head of base metals and precious metals strategy at JPMorgan, stated that it is currently the most bullish phase in the Gold cycle.

Geopolitical uncertainty.

During times of heightened geopolitical conflict, both small and large investors often flock to Gold. The geopolitical trends in 2025 clearly possess a high degree of uncertainty.

Entering 2025, from the wars in the Middle East and Ukraine to the trade disputes under President Trump's tariff threats, this uncertainty is ubiquitous. The prospect of inflation surging again also leaves investors anxious.

Against this backdrop, the enthusiasm of investors from some major economies to purchase Gold may be particularly high.

Axel Merk, President and Chief Investment Officer of Merk Investments, stated that given these market conditions, Gold is expected to continue serving as a hedge against uncertainty, which may attract significant attention from investors. "For my part, I will not sell any of my Gold, nor do I intend to, as I believe the Gold market has not peaked yet."

Central Bank Bid

Central banks around the world, especially in countries with tense relations with the West, have been aggressively buying Gold in recent years. Following the outbreak of the Russia-Ukraine conflict in 2022, the sanctions imposed by Western countries on Russia prompted some Emerging Markets central banks to abandon or reduce their dollar-based reserve Assets. Instead, they placed more reserves in overseas Assets that are untouchable by sanctions—Gold.

Goldman Sachs Analysts indicated that the sanctions against Russia "mark a clear turning point, leading many Emerging Markets central banks to rethink what is risk-free."

Data from the World Gold Council shows that in a survey conducted in 2024 of central bank governors, 29% of them indicated their intention to increase their Gold reserves in the following 12 months, the highest percentage recorded since the Council began the survey in 2018.

It is worth mentioning that at the beginning of December, the official reserve Assets data released by the People's Bank of China showed that as of the end of November, China's Gold reserves amounted to 72.96 million ounces, an increase of 0.16 million ounces from 72.8 million ounces at the end of October. This indicates that after six months, the central bank has once again increased its Gold holdings.

A recent report from Standard Chartered Bank's Wealth Management unit entitled '2025 Global Market Outlook' pointed out that Standard Chartered expects Gold to rise to $2900 per ounce in the next 12 months, while maintaining an overweight rating on Precious Metals relative to other major asset classes. The continuous strong demand from central banks remains the main driving force behind the rise in Gold prices.

The impact of industrial demand is limited.

Another advantage of Gold is that, apart from being a store of wealth, it has very few other practical uses.

Of course, some might mention the demand for jewelry - but Gold jewelry sometimes plays a role beyond just the demand side. When Gold prices rise and demand is strong, people are also more motivated to sell old jewelry to recyclers, which can then become an important source of supply.

Shearer from JPMorgan stated, "Gold does not carry the industrial burden like other commodities, so it will not be severely impacted by trade disruptions."

This means that a slowdown in economic activity (such as a new trade war initiated by the Trump administration) will not truly impact the demand for Gold as it does for other precious metals with industrial uses, like Silver and Platinum.

Bullish momentum.

It is worth mentioning that historically, when a major bull market for Gold takes off, it tends to last for a longer period.

Statistics show that in the past six years where Gold's annual increase exceeded 20%, Gold continued to rise the following year five times. Analysts from Citigroup stated that during these five instances, the average increase in Gold prices exceeded 15%.

The only exception occurred four years ago. After rising about 25% in 2020, Gold prices fell by 3.6% in 2021.