(Agence Ecofin) – The gold market had a bullish year in 2024, with annual growth of around 27%. If the yellow metal is expected to face significant challenges by 2025, analysts expect it to maintain this upward momentum.
With an annual increase of 27%, the year 2024 set records for the price of gold, which reached a new historic peak at $2,790 on October 31. As 2025 has just begun, new catalysts could continue to stimulate the rise in the price of gold, especially in a context where the stabilization of inflation remains slow, particularly in the United States.
Inflation, strengthening of the dollar, what challenges for the yellow metal in 2025?
In 2025, the price of gold could once again be sensitive to changes in inflation and macroeconomic decisions by central banks, particularly with regard to interest rates. Note in fact that the drop in interest rates generally has a positive impact on the price of gold, because it encourages an increase in demand for the yellow metal on the market, while high rates tend to reduce its attractiveness by promoting higher yielding investments.
The previous year saw the first rate cuts in major economies since the Covid-19 pandemic. In the United States, the Federal Reserve (Fed) has reduced its rates three times, the last dating back to December. If these measures had the merit of supporting the price of gold in 2024, it is still difficult to predict whether the central bank will continue this momentum in 2025.
Moreover, the FED recently announced its intention to adopt a much more “ prudent » over the coming months. For good reason, the American economy remains unpredictable and the objectives aimed at reducing inflation towards the 2% target are still far from being achieved. In this context, it currently only foresees two interest rate cuts in 2025, further fueling uncertainty among investors in the gold market.
The latest US data which describes a relatively stable job market could also support the FED’s position. In comments relayed by Reutersanalyst Carl Weinberg of High Frequency Economics explains that the central bank of the United States “will find no reason to rush to cut rates” in view of current conditions, because “the labor market does not need it”.
On the other hand, the risks associated with a strengthening of the US dollar under the new Trump administration are also at the heart of concerns. Indeed, the new tenant of the White House could support the American currency by adopting new tax and customs policies. As a result, gold may become less attractive to investors who will no longer feel the need to buy it to protect against inflation.
Bullish outlook according to analysts
Despite the risks mentioned, several analysts believe that the price of gold could maintain its upward momentum in 2025. This was indicated in particular by the World Gold Council (WGC) in a report published on November 12, at the following a drop in the price of the yellow metal after Donald Trump’s victory in the American presidential election. The WGC then explained that the persistence of geopolitical tensions in the Middle East and Ukraine should continue to support the demand for gold and strengthen its status as a benchmark safe haven.
The optimism of the World Gold Council is also shared by other specialized organizations which expect gold to trade at high levels in the coming months. Last October, the British bank HSBC, for example, revised its predictions upwards for gold, announcing an average price of $2,625 per ounce in 2025, compared to $2,105 initially forecast. The same is true for Metals Focus, which is counting on a record price of $3,000 per ounce for 2025.
While waiting to see if these forecasts come true, note that an increase in the price of gold would probably be welcomed by gold-producing countries. The latter could benefit from an increase in profits, as shareholders of gold projects, and an increase in income from exports, provided that mining sites maintain their production volumes. This applies for example to African countries such as Ghana, South Africa, Sudan, Mali and Ivory Coast where gold is one of the main export products.
Aurel Sèdjro Houenou (trainee)
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