Spot gold kicks off 2025 with substantial soar, global financial forecasts new record
File photo shows US Dollar banknotes stacked alongside bars of gold. (AA Photo)
Gold prices, which closed at $2624 last year with a 27% increase on an ounce basis, have started 2025 with a rapid surge, surpassing $2,750 with a nearly 5% rise by the end of January.
Prominent global banks have forecasted record-setting outlooks for gold prices in 2025, attributing geopolitical tensions and potential trade wars—particularly triggered by U.S. President Donald Trump—to the increased demand for the world’s oldest safe asset.
Global financial set sight on new records for spot gold
2025 price targets by major global finance institutions are as follows:
- Deutsche Bank: $3,050 (Upper limit)
- JP Morgan: $3,000
- Bank Of America: $3,000
- Citibank: $3,000
- World Gold Council: $3,000
- Macquarie Bank: $3,000
- Commonwealth Bank: $3,000
- HSBC: $2,950 (Upper limit)
- Heraeus Precious Metals: $2,950
- Goldman Sachs: $2,910
- OCBC Bank: $2,900
- ANZ Bank: $2,805
- Societe Generale: $2,800
In 2023, in October, gold reached an all-time high of $2,790 per ounce. Current levels are approximately 1.5% below that peak.
Risk factors for gold
The recent ceasefire in the Middle East has reduced geopolitical risks affecting gold prices. However, President Donald Trump’s announcement of initial tariffs against Canada, Mexico, the EU and China this week has raised concerns about “trade wars” in global markets.
Uncertainties related to the Panama Canal and Greenland have also dampened risk appetite and supported safe-haven purchases in gold. Leading financial institutions predict that central banks will continue to purchase gold to diversify reserves, besides geopolitical risks this year.
Central banks purchased 1,082 tons of gold in 2022 and 1,037 tons in 2023. The balance for last year will be announced in February.
According to data from the World Gold Council, total purchases exceeded 500 tons as of November 2024. Additionally, after a 6-month break, the Chinese central bank resumed gold purchases in November and December.
Various risks are also highlighted for gold prices. It is mentioned that policies implemented by the new administration in the U.S. could increase inflation; therefore, the Fed may move more slowly in interest rate cuts this year.
The latest expectations have been reduced to 1-2 interest rate cuts in 2025.
It is also noted that the continued high trajectory of U.S. interest rates, along with the inverse correlation effect, could curb the rise in gold prices.
