Gold had a remarkable rally in 2024, its biggest annual surge in 14 years. This has set the stage for another bullish year in 2025, according to a Yahoo Finance report citing Wall Street analysts. On Thursday, gold futures climbed over 1%, surpassing $2,670 an ounce, marking their highest level since mid-December. Investors have entered the new year with optimism, buoyed by expectations of further Federal Reserve interest rate cuts and robust gold purchases by foreign central banks.
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Despite a brief pause in gold’s (GLD) momentum following Donald Trump’s election victory, the precious metal still concluded 2024 with a stellar gain of more than 27%. This was above the increase of 23% in the S&P 500 (SPY) index.
Gold’s Bull Run Is Likely to Continue in 2025
Looking ahead, JPMorgan analysts reiterated their multi-year bullish stance, forecasting gold to approach $3,000 per ounce in 2025. These analysts noted, “Gold still looks well-situated to hedge the elevated levels of uncertainty around the macro landscape heading into the initial stages of the Trump administration in 2025”, referring to the uncertainties surrounding the initial phase of Trump’s presidency.
Analysts at Goldman Sachs shared a similarly optimistic outlook, projecting bullion prices to reach $3,000 by year-end, driven by sustained purchases of the precious metal by central banks around the world. Usually, according to Goldman Sachs analysts, emerging market central banks often accumulate gold as a safeguard against financial and geopolitical shocks. As a result, the analysts believe that if central banks buy more bullion, gold could climb to $3,050 though prices could also stall at $2,900 if the Federal Reserve decides to cut interest rates only one more time this year.
Gold Continues to be a Hedge Against Inflation
Gold is a finite physical asset, making it a natural hedge against inflation. Additionally, the precious metal is free from credit or counterparty risks, which makes it a trusted reserve asset globally, alongside government bonds. Furthermore, gold has an inverse relationship with the U.S. dollar, as it tends to rise when the dollar weakens, protecting reserves during market volatility. These factors make the asset a favorite among central banks amid geopolitical uncertainty and market turmoil.
When central banks lower interest rates, it enhances gold’s appeal as an asset because it does not yield interest, effectively reducing the opportunity cost of holding it.
As a result, as uncertainties persist, gold remains a favored asset for preserving wealth and hedging against economic volatility.
Which Is the Best Stock for Gold?
For investors interested in investing in gold, we have rounded up the best gold stock that Wall Street analysts are bullish or cautiously optimistic about using the TipRanks Stock Comparison tool. From this comparison, it appears that analysts are bullish about Wheaton Precious Metals (WPM) and Rio Tinto (RIO).
