Investing.com – Gold prices are expected to post moderate gains in 2025 as continued uncertainty over economic growth and inflation risks support demand from central banks and investors, according to analysts at RBC Capital Markets .
The had a turbulent end to the year, in part due to caution over further interest rate cuts from the Federal Reserve, which contributed to a rise in nominal and real bond yields.
Meanwhile, US President-elect Donald Trump has outlined plans to introduce steep tariffs on imports and institute more protectionist trade policies, which some economists say could lead to higher of inflation. That could lead the Fed, which cut rates three times in 2024, to cut borrowing costs at a slower pace this year. The central bank currently only plans two cuts in 2025.
Although bullion generally serves as a hedge against inflation risks, high interest rates can push up the U.S. dollar and reduce the attractiveness of non-earning assets like gold.
Nonetheless, gold prices have surged about 27% in 2024, a return that RBC analysts led by Josh Wolfson say has outperformed that of stocks and commodities in general. Average prices for the metal rose 23% annually to $2,390 per troy ounce, marking the ninth annual increase.
Analysts predict that gold will post a “positive” annual performance in 2025, as investor appetite remains whetted by “economic uncertainty (global growth, inflation risks, Fed outlook), geopolitical tensions ( deglobalization, conflicts, trade protectionism) and the persistence of high global sovereign debt.
“Furthermore, we note that concerns about higher yields are largely based on a narrative of growing inflation risks, including risks from U.S. trade protectionism, immigration policy changes and continued high budget deficits, all of which are beneficial to gold.”
Gold prices are expected to rise to an average of $2,823 per ounce per year and $2,873 per ounce in 2026, then retreat from that level over the next two years, according to forecasts from RBC.
