Gold’s extraordinary rally in 2024 cannot be ignored. With a performance exceeding 20% and new all-time highs reached, gold became a star asset. However, can it maintain this momentum in 2025? I have my doubts.
I’m not a technical trader; my analysis is grounded in fundamental factors. Based on the current outlook, I don’t see gold hitting new highs over the next six months—unless, of course, unexpected events shake the market.
Why Gold Soared in 2024
Gold’s rally in 2024 was driven by several key factors:
- Aggressive Central Bank Buying
Countries like China significantly increased their gold reserves, providing strong support for gold prices. - Geopolitical Tensions
Wars in the Middle East and Eastern Europe, particularly the heightened risk of Iran’s involvement in the Middle East conflict, fueled demand for safe-haven assets like gold. - Federal Reserve Uncertainty
The Federal Reserve’s ambiguous stance on inflation and its pledge to lower interest rates to support employment added to gold’s appeal. - Economic Uncertainty in China
China’s economic slowdown and declining yields globally created a favorable environment for gold.
Why Gold May Struggle in 2025
Looking ahead, the factors that supported gold in 2024 appear to be fading:
- Positive Yields Return
Higher interest rates have made savings and bonds more attractive compared to gold, which doesn’t pay dividends or yields. - De-escalation in the Middle East
A ceasefire between Hamas and Israel has eased tensions, reducing the urgency to hedge risks through gold. - Shifting Geopolitical Landscape
Former U.S. President Donald Trump’s pledge to negotiate an end to the war in Eastern Europe and restore global stability could reduce the need for safe-haven assets. - China’s Economic Recovery
With GDP growth returning to 5% and more stimulus measures on the horizon, China’s economy appears to be stabilizing, further diminishing gold’s appeal. - Pro-Growth Policies in the U.S.
Trump’s proposed tax cuts and growth-oriented economic policies could revive risk-on sentiment, encouraging investors to favor equities and other higher-risk assets over gold.
Conclusion
With many of the drivers behind gold’s 2024 rally fading, there’s little reason to expect significant gains in 2025. As the outlook becomes more stable and bright, investors are likely to shift toward riskier assets, leaving gold behind. Moreover, a Trump victory in the 2024 election could mark the end of gold’s recent appeal, as pro-growth policies and geopolitical de-escalation take center stage.
Of course, markets are always full of surprises, and only time will tell if this forecast holds true.