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Exploring the 2025 forecast for gold, this post delves into factors influencing the price of gold and its potential increase.

Price of Gold to Shine in 2025

Disclaimer: This website and its content are for informational purposes only and is not financial advice.

Gold is around $3,447/oz as of August 29th, 2025. This is up from $2,624 - $2,640/oz at the start of 2025. The rise is fueled by geopolitical risks, strong central bank buying, persistent inflation concerns, potential tariff complications, and a weaker US dollar. Analysts see potential for further gains this year.

Economic Uncertainty and Gold

Think about it, when things get a little shaky in the global economy, where do people often turn? History shows us that gold often becomes a safe harbor. It has long been considered a "safe-haven asset," meaning its value tends to hold up during times of market volatility and economic distress. When stock markets are turbulent or currencies face devaluation, the physical stability and historical value of gold make it an attractive alternative.

Worries about inflation? Check. Geopolitical rumblings? Unfortunately, often present. Slower economic growth on the horizon? These are all factors that can make the inherent stability of gold look pretty appealing. So far in 2025, the economic currents suggest this uncertainty could stick around, potentially giving the price of gold a real boost.

This is not just about short-term market reactions; it's a fundamental shift in how both large-scale institutions and individual investors view gold. As the global economy navigates challenges like sovereign debt issues and potential recessionary pressures, the price of gold could continue to benefit from this flight to safety.

Central Banks Emphasis on Gold

Now, let's talk about the folks who pull the strings on money matters. Central banks. Their decisions on interest rates can have a big impact. Generally, when interest rates are lower, holding gold becomes more attractive compared to investments that actually pay interest. If other asset classes are offering a lower yield, the opportunity cost of holding a non-interest-bearing asset like gold decreases.

So, if major economies keep rates low as we move through 2025, that could be good news for the price of gold. Plus, things like quantitative easing (when central banks pump more money into the economy) can sometimes weaken regular currencies, making the limited supply of gold look even better as a store of value.

However, the influence of central banks goes far beyond interest rates. Central banks are not just observers of the market; they are active participants. The World Gold Council's 2025 Central Bank Gold Reserves Survey has shown a record-breaking year for central bank gold reserves, with a majority of central banks planning to increase their gold holdings in the near future.

This trend is a clear indication of a strategic shift away from a reliance on the US dollar and a move toward diversifying national reserves. The sustained and robust buying by central banks from countries around the world, including China, Poland, and Turkey, acts as a powerful and consistent source of demand. This strong institutional backing provides a solid foundation for the price of gold and signals its growing importance as a strategic reserve asset.

Key drivers of central bank demand for gold:

• De-dollarization efforts: Many nations are actively diversifying their foreign currency reserves to reduce their reliance on the US dollar.

• Geopolitical neutrality: Gold is a politically neutral asset, making it a preferred reserve during times of international tension and shifting alliances.

• Inflation hedge: Central banks are also concerned about inflation and see gold as a reliable long-term store of value.

• Strategic importance: The sustained buying signals a long-term, structural commitment to gold, which provides a strong support level for the price of gold.

Inflation: Gold's Traditional Ally

Here's a concept we hear a lot about: inflation. Simply put, it's when your money doesn't buy as much as it used to. Gold has a long-standing reputation as an inflation hedge. When prices go up, investors often flock to gold to protect their wealth. Unlike fiat currencies, which can be devalued by excessive printing, the supply of gold is finite, which helps it maintain its purchasing power over time.

If the predictions of continued or even rising inflation come true in the coming years, this could really fuel the demand for gold and push the price of gold higher. It's like having an insurance policy for your money! As we navigate a post-pandemic economic landscape with elevated government spending and ongoing supply chain issues, the risk of inflation remains a key concern.

For both institutional investors and individuals, holding a portion of their wealth in gold is seen as a prudent strategy to safeguard against the erosion of value caused by rising prices. The historical performance of gold during past inflationary periods provides a strong case for its role as a reliable store of value.

Updated Aug 29th, 2025

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Global Hotspots: Geopolitics and Gold

Unfortunately, the world isn't always a calm place. International tensions, political shifts, and trade disagreements can all stir up market jitters. In these uncertain times, gold often shines as a beacon of stability.

When there is political instability, conflicts, or trade wars, investors tend to move capital out of riskier assets like stocks and into safer havens. The ongoing geopolitical conflicts and shifting international alliances create a climate of unpredictability, which naturally increases the appeal of gold.

The possibility of significant geopolitical events unfolding in 2025 could definitely increase the desire for gold, subsequently driving the price of gold upwards. For example, trade uncertainties, such as those related to tariffs and international relations, can lead to a weakening of major currencies, making gold more appealing.

Gold’s role as a universally accepted asset, not tied to any single government or currency, makes it an ideal hedge against these types of risks. The continued demand from both nations and individuals looking to protect their assets from geopolitical shocks will be a significant driver for the price of gold.

The Balancing Act: Supply and Demand

Finally, let's consider the basics: how much gold is out there and how much do people want? The amount of newly mined gold tends to be fairly consistent. However, the desire for gold can change based on things like investment, jewelry buying, and even industrial uses. If more investors want gold (for all the reasons we've talked about), and the supply doesn't drastically increase, well, you know what happens – the price of gold can go up.

In 2025, while mine output is expected to see a modest increase, this is being offset by a decline in gold recycling activity. This means that the overall new supply of gold remains relatively constrained. On the demand side, a clear picture is emerging. While jewelry demand has shown some weakness due to high prices in certain regions, investor demand, particularly from institutional investors and those in Asia, remains exceptionally strong.

This includes a notable increase in inflows into gold exchange-traded funds (ETFs). Also, don't forget that in many parts of the world, especially developing economies, gold has deep cultural significance and is a key part of savings. This ongoing demand can also influence the overall price of gold. When investment demand outweighs the consistent supply, the stage is set for a continued upward trend in the price of gold.

Factors influencing the supply and demand for gold:

• Mine production: The output from gold mines is relatively inelastic and tends to increase at a slow and steady pace.

• Recycling: As the price of gold rises, more people are encouraged to sell old jewelry or scrap gold, increasing the supply from recycling. However, this is currently offset by the lack of new gold entering the market.

• Investment demand: This is the most volatile component of demand, driven by market sentiment, economic conditions, and geopolitical events.

• Jewelry demand: As the single largest source of demand, jewelry consumption can be sensitive to price fluctuations, especially in price-conscious markets.

• Central bank demand: As previously mentioned, this has become a powerful and consistent source of institutional demand.

Understanding Factors that Determine Gold Prices

To truly understand the future trajectory of the price of gold, it's essential to look at all the moving parts. The spot price of gold, which is the current price at which gold can be bought or sold for immediate delivery, is influenced by a complex interplay of forces. These include the overall health of the global economy, the actions of central banks, inflationary pressures, and geopolitical stability.

The inverse relationship between the price of gold and the value of the US dollar is another critical factor. Since gold is typically priced in US dollars, a weaker dollar makes gold cheaper for buyers holding other currencies, which can increase demand and subsequently push the price of gold higher.

Conversely, a stronger dollar can put downward pressure on the gold price. In 2025, there has been expectations of a potentially weakening US dollar due to various economic factors, this could serve as a powerful catalyst for a continued rise in gold’s value.

Furthermore, the price of gold is also affected by market sentiment and speculation. The fear and greed of investors can lead to short-term volatility, but the long-term trends are driven by these fundamental economic and geopolitical factors. The current sentiment appears to be overwhelmingly bullish, with many major financial institutions forecasting new record highs for the price of gold.

Gold as an Investment in 2025

For those considering an investment in gold, it's important to understand the different ways to gain exposure. Physical gold, in the form of coins and bars, offers direct ownership and is often preferred by those seeking a tangible hedge against economic instability.

Alternatively, gold ETFs provide a convenient and liquid way to invest in gold without the complexities of physical storage and security. There are also gold mining stocks, which can offer a way to participate in the gold market with the potential for higher returns, albeit with more risk.

Regardless of the method, the core appeal of gold remains its ability to act as a portfolio diversifier. It tends to have a low correlation with other asset classes like stocks and bonds, which means it can help reduce overall portfolio risk. As we move through 2025, with its backdrop of economic uncertainty and geopolitical tension, gold’s role as a cornerstone of a diversified investment strategy is more relevant than ever.

The overall consensus among market analysts and experts is that the price of gold will continue its upward trajectory. While short-term fluctuations are always a possibility, the long-term outlook is incredibly strong. The combination of sustained central bank buying, ongoing inflation concerns, and a search for safety in an unpredictable world creates a robust environment for gold to continue to shine.

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By Jordan McCaleb, Precious Metals Investment Researcher