Gold has had its strongest annual performance since 2010. The metal jumped 27% in 2024 to reach a record high of nearly $2,800 an ounce after Trump won the presidency. The rise was also fueled by large-scale central bank purchases, monetary easing by the Federal Reserve and gold’s status as a safe haven amid geopolitical tensions, including conflicts in Ukraine and the Middle East. East.
According to Bloomberg market analysts, the key factors driving gold’s decline in 2024 could persist into the new year. However, investors are now bracing for potential economic changes in Donald Trump’s second term.
The new administration’s policies on trade, inflation and the global economy are expected to play an important role in shaping market sentiment. This uncertainty has pushed investors onto a new business path. Traders buy gold to protect their wealth and guard against possible economic downfalls.
Global central bank purchases and monetary policy 2025
Central banks, particularly in China and other emerging markets, played an important role in boosting demand for gold last year. Their sustained buying supported gold’s rally, complemented by monetary easing from the Federal Reserve, which made non-yielding assets like gold more attractive to investors.
Darwei Kung, head of commodities at DWS Group, believes these trends will continue through 2025. He predicts the price of gold will reach $2,800 by the end of 2025.
Kung noted that gold remains a key hedge against risks posed by new trade policies under President Donald Trump’s second term, which could worsen trade tensions and increase inflationary pressures.
Analysts also noted that major buyers such as China could increase their gold purchases during periods of local currency weakness. The country holds significant dollar reserves and has a strategic interest in diversifying its markets.
They found similar patterns exhibited during past episodes of yuan depreciation. To this end, increasing gold reserves can help build confidence in the Chinese currency.
Trump Victory Changes Gold and Crypto Market
Gold’s momentum waned after the US election in November, as the dollar strengthened and the stock market rallied in response to Trump’s victory. Bitcoin also gained, temporarily drawing investors’ attention away from gold.
However, analysts warn that Trump’s proposed tariffs and trade policies could weigh on economic growth and create inflationary problems. These developments could strengthen the appeal of gold as an asset of choice for investors.
President Trump’s decision to establish a strategic Bitcoin reserve using federal funds has drawn heavy criticism, particularly from longtime gold advocate Peter Schiff.
On December 13, Schiff took to social media platform X to condemn the idea. He called this “the most fiscally irresponsible thing the US government could do.” He added: “What you want to do to our gold reserve is not only bad policy, it is betrayal. »
Despite Trump’s crypto-forward agenda, Schiff doubled down on his support for gold, highlighting its steady rise in 2025. On January 2, Schiff highlighted that gold prices had climbed $34 on the first trading day of the year, recovering most of December’s losses. despite a tron dollar index.
He also compared the metal’s stability to Bitcoin, dismissing its recent rises in 2025 as insignificant. “Bitcoin is still below $100,000 and appears to be heading lower. So don’t get too excited,” he responded to an X user touting the cryptocurrency’s gains.
Meanwhile, Mike McGlone, chief commodities strategist at Bloomberg Intelligence, highlighted gold’s strong performance in 2024, where it gained 26% by the end of the year. Sharing insights on X, McGlone suggested that gold could outperform the S&P 500 in 2025, particularly if Bitcoin’s growth falters.
He added that gold could scare investors from the stock market. Schiff highlighted its potential “advantage” in the current economic climate.
Goldman Sachs lowers its gold price forecast
Goldman Sachs adjusted its forecast for gold in 2025. The company delayed its target of $3,000 per ounce to mid-2026. Analysts Lina Thomas and Daan Struyven attributed the forecast change to weaker-than-expected ETF flows in December. Additionally, the market witnessed a lower starting price for 2025.
In their report, the analysts highlight a balance between reducing speculative demand and continuing central bank purchases. They predict that central banks will maintain their monthly gold purchases averaging 38 tonnes until mid-2026. This buying trend will remain a key factor in determining prices in the long term.
Additionally, economists at Goldman Sachs predict interest rates will fall by 75 basis points in 2025. This forecast is down from their previous forecast of 100 basis points. The revised outlook reflects expectations of lower inflation. This comes as the bank expresses skepticism that policy changes under a second Trump administration will lead to higher interest rates.
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