After a market beating year what can investors expect from the gold price in 2025?

Unless you've just emerged from a lengthy hibernation, you've probably noticed that the gold price has been going ballistic this year.

On 2 January, the yellow metal was trading for US$2,059 per ounce. Gold then hit record highs north of US$2,788 per ounce on 30 October and is currently fetching US$2,692 per ounce.

That sees the gold price up 30.8% year to date.

Bullion has been benefiting from its haven status amid ongoing geopolitical tensions in Eastern Europe and the Middle East.

The yellow metal has also gotten support from robust central bank buying and falling interest rates in the United States and many developed nations. Gold, which pays no yield itself, historically tends to perform better in low and falling interest rate environments.

As you'd expect, the rising gold price has been a boon for ASX gold shares.

What kind of a boon?

Well, so far in 2024, the All Ordinaries Index (ASX: XAO) is up a solid 8.4%.

The S&P/ASX All Ordinaries Gold Index (ASX: XGD), on the other hand, has soared by 22.9%.

As for some of the biggest ASX gold miners, Northern Star Resources Ltd (ASX: NST) shares have gained 19.8% in 2024, while Evolution Mining Ltd (ASX: EVN) shares have rocketed 26.7%.

With that in mind, we turn our investing radar to the year ahead.

What's ahead for the gold price in 2025?

According to the World Gold Council's 2025 Gold Outlook Report, the gold price could benefit in 2025 if the US Fed delivers on the 1.0% interest rate cuts that market consensus expects over the year. The yellow metal would also get support from further expected cuts from the European Central Bank (ECB).

Other tailwinds for bullion and ASX gold stocks would be a flat or weakening greenback, as gold is priced in US dollars.

Potential headwinds include "marginally cooling" inflation and below-trend global economic growth. If US stocks keep marching higher, this could also capture investment flows that might otherwise go into gold.

Taking these factors into account, the WGC expects a fairly rangebound gold price performance in 2025, with the possibility of some upside.

Commenting on the outlook for the gold price, WGC's global head of research, Juan Carlos Artigas, said, "Gold is having a record-breaking year due to a confluence of factors, driving the gold price and demand to record levels."

He added, "While the current consensus on global economic performance suggests that gold could move sideways, the uncertainty surrounding the geopolitical landscape could provide a springboard for gold next year."

He noted that the gold price moves in 2025 may be "a tale of two halves".

Carlos Artigas concluded:

 2025 is set to be marked by evolving fiscal and economic policies that may result in shifting global dynamics. For gold, 2025 will be a tale of two halves – first, we may experience more risk-on appetite as we wait for strategic and tactical drivers to unravel, leading to more clarity and direction for gold's performance later in the year.

This could really ring true if there is a significant drop in interest rates or a marked increase in market volatility to further fuel investor interest. We also expect global central bank demand and Asian markets to continue playing a pivotal role.

The post After a market beating year what can investors expect from the gold price in 2025? appeared first on The Motley Fool Australia.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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