Gold experienced an exceptional year in 2024, with prices rising by 27% to reach a record high of $2,788 per ounce in October and an unprecedented annual average of $2,389. This performance reflects the continued strong demand for the precious metal as a safe haven, despite investors shifting toward high-risk assets following Trump’s victory in the U.S. elections.
UBS experts predict that gold will face pressure in the first half of 2025 due to the strength of the U.S. dollar and rising government bond yields. A stronger dollar typically increases the cost of gold for buyers, while higher yields reduce the appeal of investing in gold as a non-yielding asset. These factors may temporarily affect demand but are unlikely to negate the overall positive trend.
Despite these challenges, gold remains a strategic choice for investors seeking to diversify their portfolios and hedge against inflation. Projections suggest that demand from central banks and less interest rate-sensitive investors will continue to support prices, particularly amidst increasing financial market volatility and elevated stock valuations.
In light of these factors, UBS analysts target gold to reach $2,850 per ounce by the end of 2025. Strong demand from the official sector and individual investors is expected to reinforce gold’s position as a key investment asset in an environment of global economic uncertainty.
Great summary of UBS’s gold forecast. Their bullish stance aligns with what we are seeing in the physical gold market across Asia. The demand from central banks, particularly in China and India, has been unprecedented. One additional factor worth considering is the growing retail investor interest in gold ETFs across Southeast Asian markets, which adds another layer of buying pressure that many Western analysts tend to overlook.