World Gold Council Predicts Modest Growth for Gold in 2025.

Key Insights

The World Gold Council's outlook for 2025 indicates that gold is expected to experience "significantly slower growth" in the coming year. This year, gold prices have reached several all-time highs, marking the metal's strongest annual performance in ten years. The council also noted that a potential threat to gold prices could arise from a halt or reversal in the U.S. Federal Reserve's strategy of reducing interest rates.

After hitting multiple record highs this year and notching its best yearly performance in a decade gold is set for slower growth next year, according to the World Gold Council.

Gold prices jumped 28% in the year through November in U.S. dollars, as central bank and investor buying offset slowing growth in consumer demand, especially from China, the council said in its 2025 outlook released Thursday.

“The market consensus of key macro variables such as GDP, yields and inflation—if taken at face value—suggests a positive but much more modest growth for gold in 2025,” the council said.

The council indicated that gold could experience further increases if central banks intensify their purchases or if a swift decline in financial conditions prompts investors to pursue safe-haven assets. Additionally, the council noted that Chinese consumers, who have refrained from purchasing gold this year due to a slowing economy, could alter the market dynamics should they resume their buying activities.

The Council states that a pause or reversal in the Federal Reserve's rate cuts would negatively impact the demand for gold.

A reversal of the interest-rate cutting cycle by the U.S. Federal Reserve could negatively impact investors' appetite for gold. As interest rates increase, the yields on safer investments such as Treasury bonds may appear more attractive in comparison to gold.

"Overall, a more dovish Fed will be beneficial for gold, but a prolonged pause or policy reversal would likely put further pressure on investment demand,” the council said.

China, alongside India, represents one of the largest markets for gold, with Asia accounting for over 60% of the annual demand when excluding purchases by central banks.

In the third quarter, total gold demand surpassed $100 billion for the first time. This year, few assets have outperformed gold, with the exception of bitcoin, which has experienced a significant increase following Donald Trump's election victory.

Despite a slower growth forecast for 2025, gold remains a resilient and valuable asset. The World Gold Council's outlook highlights the potential for continued growth, driven by central bank purchases and investor demand, especially if global economic conditions prompt a flight to safety. The possibility of renewed buying from Chinese consumers further strengthens gold's position in the market.

While challenges such as U.S. interest rates could impact demand, gold’s role as a hedge against uncertainty and inflation ensures its enduring appeal. Overall, gold is poised to maintain its status as a crucial asset in global investment portfolios.

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