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Gold Outlook 2025

Navigating rates, risk and growth
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Contents
A fine line influenced by rates, risk and growth 3

2024: A record year 4

2025: A tale of two halves? 4

Sort of landing 4

Risk-on/risk-off 5

The Fed on a tightrope 5

Can Asian demand continue? 5

Central banks as buyers 6

Conclusion 6

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A fine line influenced by rates,

risk and growth
Gold is poised for its best annual performance in more than a decade – up 28%
through November. Behind this, central bank and investor buying have more than
offset a notable deceleration in consumer demand. Asian investors have been a near
constant presence, while lower yields and a weakening US dollar in Q3 fuelled Western
investment flows. However, it is gold’s role as a hedge amidst rising market volatility
and geopolitical risk that most likely explains its remarkable performance.
As we look forward, all eyes are focused on what Trump’s second term may mean for
the global economy. Thrill-seeking investors may benefit from an early wave of risk-on
flows, but potential trade wars and inflationary forces may spill over into an expected
subpar economic growth.
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. An upside could come from stronger than expected central bank demand, or
from a rapid deterioration of financial conditions leading to flight-to-quality flows.
Conversely, a reversal in monetary policy, leading to higher interest rates, will likely
bring challenges. In addition, China’s contribution to the gold market will be key:
consumers have been on the sidelines while investors have provided support. But
these dynamics hang on the direct (and indirect) effects of trade, stimulus and
perceptions of risk.

Figure 1: Gold responds to a combination of factors that influence its role as a consumer good and
investment asset
Hypothetical macroeconomic scenarios and their implied gold performance*
Current 4.5% - 4.75%; Current 4.5% - 4.75%; Current 4.5% - 4.75%;
Expected Fed funds rate
100bp lower by year end 5.5% by year-end 3% by year-end

Economic scenario Below-trend recovery Higher for longer Dovish Fed

Opportunity cost

Economic expansion

Risk and uncertainty

Momentum

Implied gold performance Rangebound with slight upside Downside pressure Notably higher

Colour key (effect on gold): Positive Neutral Negative

*Based on market consensus and other indicators by Oxford Economics as of 30 November 2024. Impact on gold performance based on average annual prices as implied
by the Gold Valuation Framework. See Figure 3, p.7 for details.
Source: Bloomberg, Oxford Economics, World Gold Council

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Table 1: Gold has performed strongly in 2024

Gold price and return across currencies*
USD (oz) EUR (oz) JPY (g) GBP (oz) CAD (oz) CHF (oz) INR (10g) RMB (g) TRY (oz) AUD (oz)
30 November price 2,651 2,509 12,751 2,084 3,711 2,336 76,400 616 91,981 4,065
Y-t-d return 27.6% 33.7% 35.1% 27.7% 35.1% 33.7% 21.4% 28.0% 50.3% 33.9%
Y-t-d average price 2,366 2,181 11,511 1,848 3,233 2,080 70,268 551 77,621 3,573
Y-t-d avg vs 2023 avg 21.9% 21.5% 31.2% 18.4% 23.4% 19.3% 19.0% 22.5% 67.8% 22.2%
*As of 30 November 2024. Based on the LBMA Gold Price PM in USD, expressed in local currencies, except for India and China that are based on the MCX Gold Sport Price
(PM) and the Shanghai Gold Benchmark PM, respectively.
Source: Bloomberg, ICE Benchmark Administration, World Gold Council

2024: A record year 2025: A tale of two halves?

The gold price has increased by more than 28% y-t-d Sort of landing
in US dollars, trading 22% higher on average this year
All eyes are on the US. Trump’s second term may
than during 2023; its performance across currencies
provide a boost to the local economy but could equally
was equally strong (Table 1). Gold reached 40 new
elicit a fair degree of nervousness for investors around
record highs y-t-d and total gold demand in the third
the world.
quarter surpassed US$100 billion for the first time.
As we look into 2025, market consensus suggests that
Investment demand, especially through over-the-
the Fed will deliver 100 bps in cuts by year end, with
counter transactions, was supported by an
inflation softening but still above target. European
undercurrent of geopolitical risk and volatility in many
central banks will also likely cut rates by a similar
regional financial markets. Central banks continued to
amount. The US dollar is expected to remain flat or
add gold to reserves y-t-d, even picking up speed in
slightly weaken as conditions normalise, while global
early October. And, for most of the third quarter,
growth remains positive but continues to grow below
Western investors flocked back to gold as central
trend.
banks started cutting interest rates.
In this context, the actions of the Fed and the direction
Against this backdrop, gold remains one of the best
of the US dollar will continue to be important drivers
performing assets of the year (Chart 1). 1
for gold. But just as the past few years have shown,
Chart 1: Gold has outperformed most major asset these two are not the only factors that determine
classes this year gold’s performance. We instead rely on a more robust
Major asset class performance y-t-d* framework that allows us to capture the contribution
of all sectors of gold demand and supply.
Gold
Specifically, we look at the role of:
US stocks
Economic expansion – and its direct effect on
EM stocks
consumer demand.
Balanced portfolio

DM stocks ex US
Risk and uncertainty – as a trigger for flows from
investors looking for effective hedges.
US bonds

US cash Opportunity cost – making gold more (or less)

Commodities
attractive relative to bond yields.

Global treasuries ex US Momentum – which can boost trends or, equally,

-10% 0% 10% 20% 30%
mean-revert them.
Return
Our analysis based on QaurumSM suggests that, if the
*As of 30 November 2024. Indices used Bloomberg Barclays Global Treasury ex
US, Bloomberg Barclays US Bond Aggregate, ICE BofA US 3-Month Treasury Bills, economy were to perform according to consensus in
New Frontier Global Institutional Portfolio Index, MSCI World ex US Total Return 2025, gold may continue to trade in a similar range
Index, Bloomberg Commodity Total Return Index, MSCI EM Total Return Index,
LBMA Gold Price PM (USD/oz), MSCI US Total Return Index. to that seen in the last part of the year, with the
Source: Bloomberg, ICE Benchmark Administration, World Gold Council potential for some upside (Figure 2, p.5).

1. US stocks have continued to move higher in recent days, and as of 9th

December have increased by more than 30%, y-t-d.

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Figure 2: Market consensus suggests rangebound There are many reasons why inflation can rebound,
performance for gold in 2025 but the economy is still not strong and a reversal in
Consensus expectations and select gold drivers* policy could deteriorate credit conditions. If the Global
Financial Crisis taught us anything, it is that when
Current 4.5% - 4.75%
Expected Fed funds rate
100bp lower by year end
issues in the system start to unravel, they unravel fast!
Economic scenario Below-trend recovery Historically, gold has risen by an average of 6% in the
Opportunity cost 10yr yields: stable, marginally down first six months of a rate cut cycle. Its subsequent
Dollar: flat to slightly down (normalisation) performance has been influenced by the length and
Economic expansion Below-trend growth depth of that cycle (Chart 2).
Risk and uncertainty Inflation falls but slightly above target
Overall, a more dovish Fed will be beneficial for gold,
Risk-on positioning
but a prolonged pause or policy reversal would likely
Geopolitical risks elevated
put further pressure on investment demand.
Momentum Commodities down marginally

Gold net positioning normalises Chart 2: Aggressive cutting cycles have served gold
well
Implied gold performance Rangebound with slight upside
Gold and USD returns in the first six months of a rate
cut cycle over the past 40 years*
Colour key (effect on gold): Positive Neutral Negative

*Based on market consensus and other indicators as of 30 November 2024.

Impact on gold performance based on average annual prices as implied by the 15%
Gold Valuation Framework. See Figure 3, p.7 for details.
Source: Bloomberg, Oxford Economics, World Gold Council 10%

As we discussed in our mid-year outlook, this implied 5%

performance likely indicates that gold is efficiently
reflecting all the currently available information. 0%

Risk-on/risk-off -5%

Trump starts his second term in late January but the -10%

US stock market is already banking on a pro-business

-15%
agenda with a near 7% increase since early November.
Tech stocks (and the Magnificent 7) have done even Gold USD Index

better.
* Data from January 1984 to August 2024 covering the past 10 Fed easing cycles.
A more business-friendly fiscal policy combined with Calculation based on the LBMA Gold Price PM, ICE BofA US 3-month Treasury Bills
and DXY Index.
an America-first agenda is likely to improve sentiment Source: Bloomberg, ICE Benchmark Administration, World Gold Council
among domestic investors and consumers. This will
likely favour risk-on trades in the first few months of Can Asian demand continue?
the year. The question, however, is whether these China and India are gold’s largest markets. More
policies will also result in inflationary pressures and generally, Asia makes up more than 60% of annual
disruptions to supply chains. In addition, concerns demand (excluding central banks). Its contributions to
about European sovereign debt are once again performance can’t be understated.
mounting, not to mention continued geopolitical
instability, particularly in light of the events in South This year, Asian investors added to gold’s
Korea and Syria in early December. performance, particularly during the first half, and
Indian demand benefitted from the reduction in
In all, this could prompt investors to look for hedges, import duty in the second half.
such as gold, to counter risk.
However, the risk of trade wars looms large. Chinese
The Fed on a tightrope consumer demand will likely depend on the health of
Monetary policy is limited in scope and its effects take economic growth – whether through normal means or
time to become evident, complicating the decisions government stimuli. And while the same factors that
made by central bankers about whether to continue, influenced investment demand in 2024 are still
pause or reverse the course of a given policy. present, gold may face competition from stocks and
real estate.
The Fed is aiming to engineer a hard-to-come-by soft
landing. It has so far managed to cool inflation without
taking the wind out of the sails of the economy. But
2025 will likely not prove easy.

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India seems to stand on a better footing. Economic While central bank demand will likely end the year
growth remains above 6.5%, and any tariff increase below previous records, it has remained strong,
will affect it less than other US trading partners given positively contributing to gold’s performance to the
a much smaller trade deficit. This, in turn, could tune of 7%–10%. 3
support gold consumer demand. At the same time,
Equally, central banks will remain an important part of
gold financial investment products have seen
the puzzle. Central bank buying is policy driven and
remarkable growth and while they make up a small
thus difficult to forecast, but our surveys and analysis
portion of the overall market, they have been a
suggest that the current trend will remain in place. In
welcome addition to gold’s ecosystem.
our view, demand in excess of 500 tonnes (the
Central banks as buyers approximate long-term trend) should still have a net
positive effect on performance. And we believe central
Central banks have been net buyers for almost 15
bank demand in 2025 will surpass that. But a
years (Chart 3). 2 The importance of gold in foreign
deceleration below that level could bring additional
reserves is well recognised: the role it plays as a long-
pressures to gold.
term store of value, as a diversifier, its performance in
times of crises, and the fact that it does not carry
credit risk. In an environment of ever-increasing
sovereign debt and geopolitical uncertainty, gold’s role
Conclusion
is well cemented. Our analysis, based on QaurumSM, examines gold’s
potential reaction to underlying market conditions
Chart 3: Central banks have been net buyers since based on the current consensus as well as a more
Q2 2009 bearish and bullish scenarios (Figure 3, p7).
Annual central bank and official sector demand*
Gold is likely to remain rangebound if existing market
1,200 expectations are correct. However, a combination of
1,000
y-t-d higher rates and lower economic growth could
negatively affect investors and consumers. This could
800
be particularly evident in Asia. Conversely, significantly
600 lower interest rates, or a deterioration in geopolitics or
financial market conditions will improve gold’s
400
performance.
200
Finally, a key checkpoint will be central bank demand
0
as it will continue to provide a boost to gold if it
-200 remains at a healthy level.
-400 Gold’s final price performance will depend on the
interaction of gold’s four key drivers: economic
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024

expansion; risk; opportunity cost; and momentum.

*As of Q3 2024. For an explanation of gold market sectors, please see the Notes
and definitions sections of Gold Demand Trends.
Source: Metals Focus, Refinitiv GFMS, World Gold Council

2. Central banks turned from net sellers to net buyers in the second quarter of gold price. When considering the balancing effects of other sectors, we
2009. However, it was not until 2010 that annual demand became estimate that the additional demand for gold this year – which will likely be
consistently net positive. close to 300 tonnes above the long-term average – would imply an additional
3. Our analysis, based on QaurumSM, suggests that, holding everything else 7%–10% increase in price performance.
constant, a net 30 tonne increase translated to approximately a 1% rise in the

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Figure 3: Hypothetical macroeconomic scenarios and their implied gold performance*

Current 4.5% - 4.75% Current 4.5% - 4.75% Current 4.5% - 4.75%
Expected Fed funds rate
100bp lower by year end 5.5% by year-end 3% by year-end

Economic scenario Below-trend recovery Higher for longer Dovish Fed

Opportunity cost 10yr yields: stable, marginally down 10yr yields: higher 10yr yields: lower

Dollar: flat to slightly down (normalisation) Dollar: up on US exceptionalism Dollar up on safe haven

Economic expansion Below-trend growth Material slowdown Growth near trend

Risk and uncertainty Inflation falls but slightly above target Inflation reaccelerates Inflation drops below 2%

Risk-on positioning Market volatility Risk-off positioning

Geopolitical risks elevated Geopolitical risks elevated Geopolitical risks elevated

Momentum Commodities down marginally Commodities rebound Commodities sell off

Gold net positioning normalises Gold net positioning weakens Gold net positioning strengthens

Implied gold performance Rangebound with slight upside Downside pressure Notably higher

Colour key (effect on gold): Positive Neutral Negative

*Based on market consensus and other indicators by Oxford Economics as of 30 November 2024. Impact on gold performance based on average annual prices as implied by
the Gold Valuation Framework. Our tool, QaurumSM, can be customised to reflect different inputs from those herein included.
Source: Bloomberg, Oxford Economics, World Gold Council

Gold Outlook 2025 07

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World Gold Council Research

We are a membership organisation that
Jeremy De Pessemier, CFA
champions the role gold plays as a strategic Asset Allocation Strategist
asset, shaping the future of a responsible and Johan Palmberg
accessible gold supply chain. Our team of Senior Quantitative Analyst

experts builds understanding of the use case Kavita Chacko

Research Head, India
and possibilities of gold through trusted
research, analysis, commentary and insights. Krishan Gopaul
Senior Analyst, EMEA

We drive industry progress, shaping policy Louise Street

Senior Markets Analyst
and setting the standards for a perpetual and
Marissa Salim
sustainable gold market. Senior Research Lead, APAC

Ray Jia
Research Head, China

Taylor Burnette
Research Lead, Americas

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Global Head of Research

Market Strategy
John Reade
Senior Market Strategist,
Europe and Asia

Joseph Cavatoni
Senior Market Strategist,
Americas

Further information:

Data sets and methodology visit:

www.gold.org/goldhub

Contact:
research@gold.org

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Published: December 2024