Gold is witnessing a noticeable rise in morning trading from the last week of 2024, after a period of sharp fluctuations. These fluctuations came after the US Federal Reserve announced its financial policy for the coming year 2025, where it reduced its expectations of reducing interest rates from 100 basis points to only 50 points.
At exactly 13:00 Riyadh time, gold is trading at $2640.7 per ounce in spot contracts, an increase of 0.26%. As for futures contracts for February 2025, they record $2641 per ounce, with a slight decrease of 0.16%.
Gold has achieved exceptional performance in 2024, recording gains estimated at about 30%, which reflects investors’ increasing interest in gold as a safe haven. However, analyses show that this positive trend in gold prices will continue, but there are warnings against excessive optimism in the first half of 2025.
Despite the positive expectations, experts believe that the market may witness some fluctuations in the coming period due to several factors. Interest in gold is expected to remain strong as global economic and financial challenges drive many investors to hedge against inflation and currency devaluation.
As 2025 begins, developments in the global economy, including interest rates, economic growth, and central bank policies, are likely to affect gold. Some have indicated that markets may witness some fluctuations due to concerns about slowing economic growth in some major countries. Therefore, gold remains one of the safe assets that investors rely on in times of economic instability. Despite the positive expectations, investors should be cautious and anticipate what the economic situation will be in the first half of 2025.
Gold prices expectations for 2025
Gold prices are expected to reach $3,000 per ounce in 2025. However, the rise may delay until the second half of the year. Currently, prices are trading around $2,650 per ounce. This expected target represents a 13% increase from current levels.
In an interview, the head of research explained that the gold market is currently in a wait-and-see phase. Investors are trying to assess the performance of the economy, which is facing the challenges of persistent inflation. Meanwhile, economic and geopolitical concerns are affecting confidence in the markets. Developments in the political situation as President-elect Donald Trump prepares to take office are expected to affect the market, increasing the uncertainty surrounding global markets.
Factors affecting prices
Despite the stability that gold has witnessed since its peak in October, the market has managed to maintain its current levels, despite the headwinds. Sheffen pointed out that prices have stabilized at a crucial support level around $2,600 per ounce.
Expectations indicate that gold prices may witness further increases if global economic conditions continue to be volatile. Challenges related to global inflation and geopolitical factors may push investors towards gold as a safe haven. Although prices are currently stable, some believe that an increase in prices to $ 3,000 may become realistic as economic conditions improve in the second half of the year.
On the other hand, talk continues about political tensions, especially in the United States, where the transfer of power will have a direct impact on global markets. In this context, gold is one of the preferred options for investors looking for safety amid increasing risks.
Gold Prices Forecast for 2025
Gold is expected to trade between $2,500 and $2,700 per ounce in the first half of 2025. However, a strong rally could take place that could push prices above $3,000 in the second half of the year. This rise is due to expectations of continued demand from emerging markets, especially from central banks that continue to support prices.
On the other hand, Michael Widmer, Director of Research at Bank of America, indicates that gold may face challenges in the coming period. The strength of the US dollar and rising bond yields may affect gold’s performance. Also, the potential economic policy of the administration of President-elect Donald Trump may contribute to increased growth and inflation, which may limit investors’ desire to buy gold in the near term.
Factors affecting prices
Despite the challenges, many analysts believe that continued demand from emerging markets and central banks will continue to support prices. In this context, John LaForge, Head of Real Asset Strategy at Wells Fargo, indicated that central banks in emerging markets will remain a major support for prices. Many of these banks still hold small percentages of their reserves in gold, leaving room for further growth in the future.
Furthermore, Tom Bruce, a macro investment strategist, believes that consumer demand in emerging markets, particularly in Asia, will continue to be a strong factor supporting the market. Despite the slight slowdown in gold purchases by central banks recently, consumer demand continues to be a significant part of gold’s upside.
Gold Outlook
According to the World Gold Council, economic models indicate that gold prices will see moderate growth through 2025. Prices are likely to make further gains if strong demand from central banks continues or if markets experience financial turmoil. Gold appears to remain a preferred choice for investors seeking a safe.
