In 2024, gold prices shattered records, hitting 39 all-time highs, a feat unmatched in 45 years, according to the World Gold Council. This meteoric rise, with prices soaring over 25% to $2,734 per ounce by October, has investors buzzing: is gold poised for another explosive surge in 2025? Driven by a perfect storm of geopolitical tensions, central bank buying, and monetary policy shifts, gold’s stellar performance as a safe-haven asset demands attention.
The year’s volatility fueled gold’s ascent. U.S. President Donald Trump’s tariff threats against Canada, China, and Mexico stoked fears of trade wars and inflation, pushing investors toward gold as a hedge. Geopolitical unrest, from conflicts in Ukraine and the Middle East to uncertainties surrounding the U.S. presidential election, further amplified demand. Central banks, particularly in China, India, and Russia, played a pivotal role, purchasing over 1,000 tonnes of gold for the third consecutive year. The Reserve Bank of India alone boosted its gold reserves by 77 tonnes, reflecting a broader trend of de-dollarization and mistrust in the U.S. dollar. These purchases, coupled with strong Asian retail demand, especially in India and China, propelled prices to unprecedented levels.
Monetary policy shifts also supercharged gold’s rally. The U.S. Federal Reserve cut interest rates three times in 2024, with two more projected for 2025, making non-yielding gold more attractive than bonds. Falling interest rates weaken the dollar, historically inversely correlated with gold, further driving prices. Meanwhile, global gold exchange-traded funds (ETFs) saw inflows of $9.4 billion in February 2025, the highest in nearly three years, signaling renewed investor confidence. In India, gold reached Rs 79,681 per 10 grams during Dhanteras, underscoring robust consumer and investment demand despite high prices.
Yet, not all signals point to unchecked growth. Some analysts warn of a potential correction. High prices have spurred gold mining, with profit margins hitting $950 per ounce in Q2 2024, the most lucrative since 2012. Increased supply from mining and recycling could exert downward pressure. Morningstar’s Jon Mills predicts a 38% plunge to $1,820 per ounce over five years, citing waning central bank demand and investor fatigue. Jewellery consumption, down 11% globally due to affordability issues, also tempers optimism. In China, jewellery demand fell 24%, though India’s market remained resilient.
Despite these concerns, many remain bullish. J.P. Morgan and UBP forecast gold reaching $3,000–$3,200 per ounce in 2025, driven by persistent geopolitical risks and potential U.S. policy disruptions. Gold’s role as a portfolio diversifier, with low correlation to stocks, continues to attract money managers. The BRICS initiative to explore a gold-backed currency adds speculative fuel, though Trump’s 100% tariff threat against such moves highlights its contentiousness.
As 2025 unfolds, gold’s trajectory hinges on inflation trends, central bank actions, and global stability. While risks of a pullback loom, the metal’s historic resilience and current momentum suggest it remains a compelling asset. Investors eyeing gold must weigh its safe-haven allure against the possibility of a crowded trade, but for now, its glitter shows no sign of fading.
