In 2024, gold prices surged by 27%, hitting a record high due to the support from monetary easing, safe-haven demand, and ongoing purchases by global central banks. However, the momentum for gold stalled in early November as the dollar was bolstered by Trump’s victory in the U.S. presidential election. Recently, gold prices have faced pressure as Federal Reserve officials indicated that more cautious rate cuts are necessary amid renewed inflation concerns this year.
Goldman Sachs analysts Lina Thomas and Daan Struyven have revised their target price for gold in 2025, lowering it from $3,000 per ounce to $2,910 per ounce, predicting that gold prices will only reach $3,000 per ounce by mid-2026 due to the possibility of smaller-than-expected rate cuts by the Federal Reserve.
In their report, they mentioned that the anticipated slowdown in monetary easing in 2025 will dampen demand for gold-backed exchange-traded funds (ETFs), with gold prices expected to reach $2,910 per ounce by year-end. ETF inflows in December were below expectations, primarily due to reduced uncertainty following the U.S. election, resulting in a lower starting point.
Analysts pointed out that current gold prices are influenced by two main factors: declining speculative demand on one hand, and increasing central bank demand for gold on the other. This interplay has resulted in gold prices fluctuating within a range over the past few months. Central bank purchases of gold are becoming a key long-term support for gold prices, which are expected to continue being driven by this demand. By mid-2026, the average monthly gold purchase by central banks is projected to reach 38 tons.
Goldman’s economists now expect a rate cut of 75 basis points this year, down from the previously anticipated 100 basis points. This prediction is more dovish than the current market pricing. Economists are also skeptical that policy changes under a potential second term for Trump could lead to higher interest rates.
However, other investment banks have not altered their outlook for gold in 2025. Max Layton, the global head of commodity research at Citigroup, stated that as Trump’s agenda takes shape, the outlook for oil prices becomes increasingly pessimistic, but the key drivers for gold’s increase remain intact. Citigroup expects the target price to stay at $2,800 per ounce over the next three months and at $3,000 per ounce over the next six to twelve months.
