Investing.com — Gold prices are expected to continue rising in 2025, according to UBS analysts, driven by two key factors: falling interest rates and continued geopolitical risks.
These elements should strengthen gold's status as a safe haven, while benefiting from the broader economic conditions forecast for the year ahead.
The prospect of lower interest rates is the first important factor contributing to the increase in the price of gold.
UBS predicts that central banks around the world will adopt a more dovish monetary stance in response to weak inflationary pressures and slowing economic growth.
In such an environment, cash and bonds lose their appeal, making gold – a zero-yielding asset – more attractive to investors seeking stable returns.
UBS notes that falling yields in other asset classes are likely to lead to increased capital flows into gold, boosting its value.
In addition to monetary policy, geopolitical uncertainties continue to support gold demand. From increased tensions in Eastern Europe and the Middle East to lingering concerns over U.S. government debt, these factors have increased gold's appeal as a reliable store of value during periods of market volatility.
UBS points out that continued uncertainty surrounding global trade dynamics and risks associated with budget deficits in major economies also contribute to the metal's appeal.
UBS also mentions the broader structural trends that support gold in the medium to long term.
These include increased investments in transition metals for renewable energy projects, which are expected to create overlapping demand dynamics, and the evolving macroeconomic landscape shaped by deglobalization and changes demographics.
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