The World Gold Council (WGC) has released its 2025 gold outlook, highlighting various macroeconomic factors, geopolitical risks and central bank activity as pivotal forces influencing demand and prices.
While 2024 saw gold achieve a stellar performance with a 28 percent annual increase, the outlook for 2025 is characterized by a mix of opportunities and challenges stemming from both global and regional developments.
The yellow metal has benefited from its historical role as a hedge against uncertainty, but the WGC forecasts that its performance next year will depend on other key variables as well.
Gold to face complex drivers next year
Looking back at 2024, the WGC outlines multiple factors that drove gold’s strong performance.
For instance, central bank demand reached significant levels, underscoring the metal’s enduring role as a safe-haven asset. Central banks have now been net buyers of gold for nearly 15 years.
Meanwhile, investor interest surged amid geopolitical instability and market volatility, particularly in the third quarter, when western investors returned to the market, driven by lower yields and a weakening US dollar.
Asian demand, a critical component of the gold market, played a supportive role in the first half of the year.
Indian demand was buoyed by favorable policy changes, including a reduction in import duties, while Chinese investors turned to gold amid concerns about economic growth.
Heading into 2025, the complex global economic picture is creating uncertainty for gold.
In the US, Donald Trump is expected to introduce policies that stimulate domestic economic growth during his second term as president, potentially driving risk-on sentiment in the short term. However, these policies could also create inflationary pressures and disrupt supply chains, leading investors to seek the stability of assets like gold.
Central banks, including the US Federal Reserve, are anticipated to continue cutting interest rates. Market consensus suggests the Fed will cut by 100 basis points in 2025, with similar actions expected in Europe.
The WGC forecasts in its report that a dovish monetary policy environment could be supportive for the gold price, particularly if inflation remains above target levels. On the other hand, any reversal in monetary policy or a prolonged pause in rate cuts could present challenges for gold, as higher opportunity costs may deter investors.
Similarly, subdued economic growth could limit consumer demand, particularly in Asia, where gold plays a dual role as an investment and a cultural staple.
Asia and central banks to lead gold buying
In 2025, the WGC predicts that Asia will remain a cornerstone of the global gold market. The continent accounts for over 60 percent of annual demand, excluding central bank activity.
Chinese consumer demand, which has been relatively muted, is likely to hinge on…
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