WGC: Gold Prices Likely to Rise at a More Moderate Pace in 2025

According to the World Gold Council (WGC), if market conditions remain stable, gold prices are expected to rise at a more measured pace in 2025. The WGC stated that if the economy performs as market expectations suggest, gold prices should increase at a more modest rate compared to this year.

The WGC noted, "Gold has the potential to rise if central bank demand is stronger than expected or if a rapid financial deterioration increases safe-haven demand; however, a reversal of the interest rate cut cycle will also bring challenges."

Gold is preparing for its best annual performance in over a decade in 2024. Prices broke records 40 times throughout the year, reaching $2,826.30 per ounce by the end of October, while total gold demand in the third quarter surpassed $100 billion for the first time.

Despite the brief and sharp sell-off following Donald Trump's victory in the U.S. presidential elections earlier in November, prices have increased over 25% year-to-date.

The WGC remarked, "This reflects central bank purchases and safe-haven demand amid market volatility and geopolitical risks. Ongoing geopolitical instability in the Middle East, Eastern Europe, along with growing concerns about public debt in Europe, has also pushed prices higher. All of this may prompt investors to seek protective assets like gold against risk. As a result, this situation may lead investors to look for hedges like gold to counter risk."

The report indicates that the market is currently pricing in approximately a 100 basis point U.S. interest rate cut for 2025, with a similar figure expected for European central banks. This situation, along with expectations for the U.S. dollar to remain flat or weaken slightly as conditions normalize, is likely to benefit non-yielding bullion.

However, a prolonged pause or reversal of interest rate cuts would put pressure on demand for gold investments. As Donald Trump is expected to present a business-friendly agenda after being elected president, there are questions about whether his policies will lead to inflationary pressures and supply chain disruptions, which could reduce the extent and scope of monetary policy easing.

The report stated, "Looking ahead, all eyes are focused on what Trump's second term could mean for the global economy."