Few investments did better in 2024 than gold, which is wrapping up its best year since 2010 and one of its largest annual gains on record. Wall Street’s gold bugs think prices will climb even higher in 2025.
Prices for the precious metal are up 27% in 2024 to $2,617.20 a troy ounce. That is better than the S&P 500’s 25% gain and not far behind the 31% increase of the technology-stock-laden Nasdaq Composite Index.
Gold futures hit a record ahead of the U.S. presidential election but have declined since then. That was expected, though, as investors who had been nervous about the election’s outcome moved money from the haven and back into riskier assets.
Analysts at JPMorgan, Goldman Sachs and Citigroup share a price target of $3,000. Here are some of their reasons:
The extent to which the Federal Reserve cuts interest rates remains to be determined, but investors expect further reductions in 2025. The lower rates get, the lower the opportunity cost of owning gold, which pays no interest or dividends.
Analysts expect some portion of the $6.7 trillion held in money-market funds to find its way into exchange-traded funds that hold gold, such as SPDR Gold Shares, as investors become disenchanted with declining yields. “This is the most bullish part of the cycle for gold,” said Greg Shearer, head of base- and precious-metals strategy at JPMorgan.
Investors large and small tend to flock to gold in times of heightened conflict. And there is plenty of that headed into 2025, from wars in the Middle East and Ukraine to President-elect Donald Trump’s vows to escalate trade disputes with China and other countries. The prospect that inflation will flare up again also has investors on edge.
Investors in China have been especially enthusiastic about buying gold lately, given the country’s slumping economy and stocks, as well as Trump’s threats to levy tariffs on its exports to the U.S.
Central banks around the world, especially in countries that have strained relationships with the West, have been gobbling up gold. China, in particular, is a powerful source of demand, with official gold reserves more than tripling since 2008, according to Goldman Sachs.
Western sanctions on Russia after it started its full-scale invasion of Ukraine in 2022 prompted some central banks to move away from dollar-based assets. Instead, they are keeping more of their reserves at hand and in an asset, gold, that is beyond the reach of foreigners.
