Major Banks Project Continued Gold Price Rally into 2025

(Reuters) – Major banks predict that gold will extend its record-breaking price rally into 2025, driven by increased inflows to exchange-traded funds (ETFs) and anticipated interest rate cuts from central banks, notably the U.S. Federal Reserve.

Goldman Sachs reiterated its long-term bullish stance on gold, noting that lower global interest rates, stronger central bank demand, and gold’s appeal as a hedge against geopolitical and financial risks will support prices.

Analysts forecast that central bank purchases on the London OTC market could contribute to two-thirds of the expected increase in gold prices to $2,900 per ounce by early 2025. The remaining one-third of this price rise is anticipated to stem from a gradual uptick in ETF flows post-Fed rate cuts.

Gold, which is non-yielding, has seen a significant increase this year, gaining nearly $577 an ounce (over 28%), on track for its largest annual increase since 2010. It reached a record high of $2,685.42 per ounce last week, registering multiple record highs this year.

J.P. Morgan analysts pointed out that while physical demand from countries like China and central banks has supported prices over the last two years, continued investor interest, especially in retail-focused ETFs, will play a crucial role in sustaining the rally.

The Federal Reserve initiated a rate-cutting cycle on September 18, beginning with a half-percentage-point cut, with expectations for additional cuts totaling 50 basis points by year-end and an entire percentage point in 2024.

Gold tends to be a more attractive investment in low-interest environments and amid geopolitical uncertainty. Furthermore, analysts note that the upcoming U.S. presidential election on November 5 could elevate gold prices due to potential market volatility encouraging investors towards safer assets.

Brokerage Price Forecasts for Gold (in $ per ounce)

end-of-period forecasts
(This story has been refiled to fix the date in dateline)