Money (investment) managers see plenty of reasons to remain optimistic about gold, after 2024 saw the precious metal record its biggest annual gains since 2010.
The yellow metal rose 27% last year to record levels, rising to nearly $2,800 an ounce, driven by 3 main factors:
- Large purchases by central banks, particularly from China and other emerging markets.
- Easing monetary policy by the Federal Reserve (US central bank), making gold more attractive.
- The precious metal’s historical role as a safe haven amid ongoing geopolitical tensions, including the wars in Ukraine and over Gaza.
Expectations of $3,000 per ounce
Bloomberg reported that these factors will continue in some way in 2025, but investors are also preparing for Donald Trump’s second term and the potential impact of the new president on trade flows, inflation, and the global economy.
This possibility continues to stimulate the purchase of gold as a means of protecting wealth and hedging against potential negative shocks, according to Bloomberg.
The agency quoted the portfolio manager at Pacific Investment Management, Greg Charino, as saying that diversifying investment through buying bullion is a “trend that will continue,” expecting that central banks and high-wealth families will continue to consider gold attractive.
The American hedge fund Quantex Commodities keeps 30% of its holdings in gold, which is nearly twice the weight of the metal in the Bloomberg Commodity Index, and plans to maintain this position through 2025, according to its CEO Matt Schwab, who expects gold to rise to $3,000 in a year. .
Wall Street bank strategists are optimistic about gold’s performance in the new year, as Bank of America and JP Morgan expect bullion to reach $3,000 by the end of the year, while UBS Group AG expects $2,900.
Goldman Sachs Group lowered its bullish forecast, but still expects prices to reach $3,000 by mid-2026.
Longer term
In the longer term, the prospect of new tariffs is seen as accelerating trade tensions and risking a slowdown in economic growth, and economists and analysts say the measures proposed by Trump are fueling inflation, complicating the Fed’s path to rate cuts this year.
After presenting the expected quarter-point cut at their last meeting of 2024, Fed officials on December 18 indicated only two rate cuts for 2025, and greater caution about how quickly they could continue to reduce borrowing costs.
“If trade relations deteriorate with Trump’s new policy, we may see the stock market react negatively,” said DWS Group’s head of commodities, Darui Kong, who expects gold to rise to $2,800 by the end of the year. “Gold will be a good asset to hold as a hedge against such… “These risks.”
For the rest of the world, potential trade wars with the United States may prompt central banks to accelerate the pace of easing, a scenario that would boost gold’s performance, Bloomberg quoted managing partner at Swiss Frontier Commodities, Alain Carnesello, as saying.
