Major banks are forecasting a continued rise in gold prices until 2025, fueled by new inflows into Exchange-Traded Funds (ETFs) and expectations of further interest rate cuts by key central banks, including the U.S. Federal Reserve. Goldman Sachs Group reaffirmed its positive outlook on gold, attributing its forecast to the cumulative impact of lower global interest rates, sustained demand from central banks, and the metal's defensive characteristics against economic risks.
Goldman Sachs expects gold to reach $2,900 per ounce by early 2025, with approximately two-thirds of this rise driven by ongoing central bank purchases in the London Over-the-Counter market. The remaining third is anticipated to come from gradual increases in ETF inflows following expected interest rate cuts by the Federal Reserve.
As for detailed price forecasts for 2024 and 2025, Commerzbank suggests a target of $2,600 per ounce by mid-2025, while ANZ expects a rise to $2,900 by the end of the same year. Macquarie sees the potential for prices to reach $3,000 per ounce, while Goldman Sachs maintains its forecast of $2,900 per ounce by early 2025. UBS forecasts gold will reach $2,700 by mid-2025, while Bank of America sees the possibility of gold reaching $3,000 per ounce.
Gold has seen significant gains in 2024, increasing by approximately $577 per ounce, representing a rise of more than 28%, setting it on track to achieve its largest annual gain since 2010. Last week, gold reached a new all-time high of $2,685.42 per ounce and continued to set new records throughout the year.
J.P. Morgan analysts highlighted the importance of retail-oriented ETF inflows in driving gold's continuous rise, noting that this trend has been bolstered by strong physical demand from China and central banks over the past two years. The Federal Reserve began a new easing cycle on September 18 by cutting interest rates by half a percentage point and signaled an additional 50 basis point cut by the end of the year, with a full one-point cut expected next year.
The upcoming U.S. presidential election on November 5, 2024, could further drive gold prices as potential market volatility may prompt investors to seek safety in the precious metal.
