Analysts at major Wall Street banks generally expect the Gold Futures bull rally to continue into 2025.
And mainstream analysts tend to think the year will remain free from any kind of significant economic chaos or crisis.
Gold had a tremendous 2024, setting multiple records and closing the year with a 26.5 percent gain. It was one of the best-performing assets last year.
According to a survey of Wall Street banks and other players in the gold market conducted by the Financial Times, gold will continue to post gains in 2025, although the pace of the bull run will likely moderate.
On average, Wall Street analysts expect gold to gain another 7 percent in the coming year.
Goldman Sachs was the most bullish, projecting gold will eclipse $3,000 per ounce in 2025. The bank's analysts cited interest rate cuts by the Federal Reserve and continued central bank gold buying as bullish factors.
Heraeus Precious Metals' global head of trading, Henrik Marx, also mentioned central bank gold demand, telling the Times, “We think central bank interest will be a strong base for the buying next year." He projected gold will close out 2025 at $2,950 per ounce.
Marx sees the Trump era as bullish for gold. He indicated that he doesn't see much hope for any meaningful curb on federal government borrowing and spending.
"Whatever [Trump] announces will increase debt, leading to a weaker US Dollar and increased inflation. That is usually a nice mixture for gold.”
Société Générale head of commodities Michael Haigh also mentioned "elevated U.S. fiscal spending," along with uncertain geopolitical factors as bullish for gold.
“Momentum is taking back over, combined with geopolitical tensions, which is going to add more fuel to the fire."
The World Gold Council noted that "key macro variables such as GDP, yields and inflation – if taken at face value – suggests positive but much more modest growth for gold in 2025."
"Upside could come from stronger than expected central bank demand, or from a rapid deterioration of financial conditions leading to flight-to-quality flows. Conversely, a reversal in monetary policy, leading to higher interest rates, would likely bring challenges. In addition, China’s contribution to the gold market will be key: consumers have been on the sidelines while investors have provided support. But these dynamics hang on the direct (and indirect) effects of trade, stimulus and perceptions of risk."
It's important to note that Wall Street analysts generally think the economy is gliding to a soft landing. They don't anticipate any kind of economic crisis in the coming year, and they expect the Federal Reserve will move forward with rate cuts at a relatively modest pace.
Any kind of economic upheaval would drastically change the calculus of gold. If the economy breaks under the pressure of higher interest rates, and if the Fed speeds up the pace of rate cuts, gold would get an even bigger boost.
In my view, some type of economic chaos is more likely than not in the next 12 to 18 months. This debt-riddled bubble economy is addicted to easy money and can't function in a higher interest rate environment.
However, sticky price inflation is forcing the Fed to go slow on easing monetary policy. It seems unlikely the central bank can manage this balancing act.
If there is a major economic crisis, the Federal Reserve will most likely slash rates back to zero and start running quantitative easing. After all, that's the fork it knows.
In this scenario, the price of gold would likely blow through the roof.
Originally Published on Money Metals Exchange.