The gold price had a stellar year in 2024, rising by 27% and hitting an all time high. Many leading commentators see gold hitting new records in 2025.
“The reasons for 2024’s strong gain have been widely articulated: central bank buying, geopolitical events, weaponization of the dollar, the Fed interest rate cutting cycle and bond market worries,” Sprott’s John Hathaway said.
“We believe the next substantial increase will be driven by a series of surprising events for which investors are incorrectly positioned. Our best guesses are a bear market; a steep, lengthy retreat in cryptocurrencies; bond market disruption with interest rate risk morphing into credit risk; and unwanted, persistent US dollar strength that threatens economic instability.
“When, if and how these events occur is admittedly speculative but, in our opinion, all are plausible.”
Hathaway said if any or all of those events occurred, inflows from Western capital markets had the potential to double or triple metal prices.
“The price dynamics would closely resemble those that have driven Bitcoin prices to levels unimagined only months ago — supply inelasticity coupled with a sudden, surprising and unrestrained demand surge,” he said.
BMO Capital Markets analyst George Heppel sees five key themes for gold in 2025: an increased risk of sticky inflation due to the incoming Trump administration; gold as a hedge against artificial intelligence and quantum investment; continued central bank de-dollarization; Chinese gold buying incentivized by PBOC policy; and a decline in gold’s geopolitical risk premium.
“Given its unique set of demand characteristics, gold has always required a different framework for market analysis beyond the traditional supply-demand-cost-inventories matrix,” Heppel said.
“While central bank de-dollarization will remain a consistent source of gold demand this year, we believe additional demand could come from investors seeking a hedge against sticky inflation or higher-risk investment in AI – both adequately hedged by gold or gold equities.
“Further demand could also come from Chinese investors, considering China’s continued economic headwinds and Beijing's expressed desire to depreciate the RMB.”
China purchased gold in December, with its holdings rising to 73.3 million ounces, up from 73.0Moz in November.
“Our main headwind could be any incremental reduction in geopolitical risk, which could lower investment appetite for gold as a crisis hedge,” Heppel said.
Goldman Sachs said this week it remained constructive on gold for 2025-26 due to structurally higher central bank demand with additional cyclical support from a gradual boost to ETF holdings as the funds rate declines.
The bank had seen gold reaching a record US$3000/oz in December this year, but pushed back that expectation to mid-2026 due to its forecast 75 basis points of rate cuts this year, down from 100bp previously.
It lifted its long-term gold price to US$2300/oz from 2029 upwards, up from US$1950/oz from 2028.
Canaccord Genuity sees gold averaging US$2708/oz this year, up from US$2386/oz last year.
It increased its 2030 gold price by 5.3% to US$3119/oz.
Meanwhile, BMO’s Heppel sees gold equities returning to the mainstream in 2025.
“Despite gold’s vivacious rally in 2024, mining equities have largely disappointed, with the GDX and GDXJ rising just 10.1% and 14.9% against a gold price increase of 25.8% in CY2024,” he said.
“We expect stricter cost management and better capital allocation to be key themes in 2025, likely encouraging a selective return to gold equities from investors.”