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Gold likely to hit $3,000 next year, analysts predict

Metal's long-term fundamentals remain strong despite current headwinds

Published: Thu 26 Dec 2024, 6:55 PM

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Gold displays at a jewellery shop in Dubai Gold Souq. — file photo

Gold displays at a jewellery shop in Dubai Gold Souq. — file photo

The 2025 gold outlook is shaped by a complex interplay of macroeconomic, geopolitical, and technical factors. While the early part of the year may present challenges, the metal’s long-term fundamentals remain strong, analysts say.

Goldman Sachs Research forecasts the price will reach $2,700 by early next year, buoyed by interest rate cuts by the Federal Reserve and gold purchases by emerging market central banks. The metal could get an additional boost if the US imposes new financial sanctions or if concerns mount about the US debt burden.

“Inflationary pressures, central bank buying, and geopolitical uncertainties continue to support gold’s role as a strategic asset in diversified portfolios,” Fawad Razaqzada, market analyst, forex.com, said in a note.

Gold reached new horizons this year, creating a series of 39 record highs. It emerged as one of the best performing commodities in 2024, propelled higher by rate-cut optimism, safe-haven demand from geopolitical tensions, and robust central bank purchases. In October 2024, gold soared past $2,700 for the first time and reached a peak of $2,790. Then, in November 2024, Donald Trump’s decisive victory in the US presidential election brought with it the threat of a revival in inflationary pressures due to his ‘America First’ protectionist stance.

Although the Federal Reserve cut interest rates for the third time this year in December, it signalled a more cautious approach in 2025. The central bank revised its year-ahead inflation expectations higher and presented a dot plot that suggests a much slower pace of easing next year. “This strengthened the dollar and treasury yields, thereby sparking a correction in gold prices from October’s peak of $2,790 to a November low of $2,536. Since then, gold has recovered partially to trade just above its 100-SMA on the day chart at around $2,615 as of 24 December 2024,” said Vijay Valecha, Chief Investment Officer, Century Financial.

Moving forward, gold prices are expected to continue advancing in 2025, supported by the ongoing momentum of central bank purchases. Countries like Turkey and India have ramped up their gold holdings in a bid to diversify their foreign reserves away from the US Dollar. Over the first three quarters of 2024, global central banks acquired 693.52 metric tonnes of bullion. As a result, the annual total is expected to either match or surpass the substantial tally over the last two years – which stood at 1,081 and 1,049 metric tons in 2022 and 2023, respectively.

Gold-ETF fluctuated over the last few years. They turned positive for the first time this year in March 2024 after three consecutive years of outflows. “Although recent months have experienced outflows, investors still appear optimistic about the precious metal. Global gold demand has always outpaced mine production over the last several years, thereby aiding gold’s rally. As a result, gold prices could advance in 2025, albeit at a slower pace relative to this year. Gold is expected to be a critical asset to stabilize and diversify investment portfolios in 2025. This is particularly because global uncertainty is projected to increase, particularly under Trump’s administration,” Valecha said.

Accoerding to Razaqzada, $2,700 is the most significant near-term resistance level to watch in 2025, where the resistance trend of the potential bull flag pattern meets prior resistance. A clean break above here could target the 2024 high of $2,790. “$3,000 is the next big psychological level to watch should prices break to a new high in 2025. Expect at least some profit-taking around here,” he said.

For professional investors and retail traders alike, navigating the gold market in 2025 will require a balanced approach. “Monitoring key economic indicators, currency movements, and geopolitical developments will be essential for identifying opportunities and managing risks. With a cautious start expected, patient investors could see gold regain its shine, ultimately pushing toward the coveted $3,000 mark,” Razaqzada said.



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