PETALING JAYA: Gold price has room to make more gains in 2025 as most experts are pegging the precious metal could rise to between US$2,900 and US$3,000 per ounce, or even higher, thanks to, among others, central banks worldwide upping their gold purchases as a reliable investment.
In addition to central banks buying, analysts, bankers and economists attributed the expected increase in gold prices to geopolitical tensions, expected declines in global interest rates and ongoing economic uncertainties.
They also noted that gold serves an effective hedge against rising inflationary pressures.
Juwai IQI global chief economist Shan Saeed
Expressing his bullishness on gold, Juwai IQI global chief economist Shan Saeed told StarBiz he is expecting the price of the precious metal to be in the range of between US$3,000 and US$5,000 per ounce by next year.
“I am bullish on the gold market for the next five to 10 years, as gold is the only asset class with zero counterparty risk.
“Gold demand remains stronger than ever before, as macroeconomic variables are favourable for the yellow metal,“ he said.
Citing the latest report from the World Gold Council, Shan forecast gold price is expected to rise an average of 5% annually through 2040.
During the stagflation of the 1970s, gold prices rose at an average annualised rate of over 30% over the course of the decade.
“Is history repeating itself after 55 years? That’s phenomenal growth by any measure, but whether it can happen again remains to be seen,” he said.
Gold reached record highs in 2024, with prices peaking at US$2,790 per ounce in October – a 35% year-to-date gain.
It has since eased to around US$2,650 a troy ounce currently. As of press time, gold was up by 0.7% to US$2,634 per ounce.
Shan noted that central banks are on a buying spree for the precious metal.
In the first three quarters of 2024, the central banks of India and Turkiye were among the most active buyers of gold, purchasing 77 tonnes and 72 tonnes, respectively.
The Polish central bank’s gold purchase was 69 tonnes during the period, while China’s bought 30 tonnes of the yellow metal.
Gold’s biggest growth years before 2024 were in 2010, 2020 and 2019, when it gained 29.71%, 25.14% and 18.3%, respectively, according to the World Gold Council.
Gold’s biggest losses were in 2013, 2015 and 2021, with declines of 28.04%, 10.52% and 4.39%, respectively.
Shan noted that like other assets, gold can both gain and lose value.
That’s not unique among any sort of asset class, he said, adding that gold remains a key wealth insurance asset for global investors.
Meanwhile, UBS maintained its bullish stance on gold, targeting US$2,900 per ounce by the end of 2025, while Deutsche Bank predicted strong physical demand to underpin prices around US$2,800.
Similarly, JP Morgan forecasted an average price of US$2,950 per ounce, emphasising gold’s utility as a hedge against inflation and macroeconomic disruptions.
OCBC Bank meanwhile kept its 12-month gold price target unchanged at US$2,900 per ounce.
Habib Group executive chairman Datuk Seri Meer Habib
Habib Group executive chairman Datuk Seri Meer Habib, a certified gemologist, said gold is always traditionally considered as a secure investment.
Despite recent rallies, he emphasised that gold is one of the safest and most reliable investment options, with demand for gold investment items remaining strong.
While he noted a slight decrease in those buying gold as adornment, he expected a continued strong market for selling gold.
He also pointed out that with the anticipated 7% to 15% increase in government salaries next year, gold demand is likely to rise further.
On the global front, Meer Habib forecasted higher gold prices in the coming year, due to geopolitical tensions in the Middle East, possible escalation of trade tensions between the United States and China, and increases purchases by central banks.
“We expect the prices of gold to rise as we expect inflation to rise moderately, ranging from 2% to 3.5% in 2025.
“And if the US dollar strengthens, we may see the ringgit weaken.
“However, purchasing gold will be more favourable against inflation and against economic uncertainties,” he added.
According to Meer Habib, gold could rise to US$2,900 an ounce by the end of 2025, in line with rising demand.
”The next US Federal Reserve (Fed) meeting will be held on Jan 28 to Jan 29 next year, and most likely the Fed will maintain the current interest rate to reassess the economy outlook and policy.
“The projection I had for 2024 was that gold price would go up to US$2,700 to US$2,800 per ounce, which it did on Oct 31 this year to US$2,790.02 per ounce,” he added.
However, Meer Habib noted that higher inflation and the government’s subsidy rationalisation in 2025 could challenge local gold demand.
“A strong US dollar supported by higher interest rates, or strong US economic performance, typically reduces gold’s appeal for international buyers.
“In the Malaysian context, it will also depend on the ringgit. If the ringgit strengthens, the gold price may come down,” he said.
He also noted that a strong stock market could divert capital from safe-haven assets like gold.
“If global tensions ease, the safe-haven demand for gold may diminish.
“Stable geopolitical conditions often correlate with a decline in gold prices,” he added.
