What To Expect From Gold in Early 2025
Gold has always been treasured as an investment. But when times are uncertain, it gets even more appealing. And when demand is high, its price is high, too. Its value can also be influenced by the market, the global economy and world events.
So what does the near future have in store for gold? We can get some clues if we take a look at how gold performed in 2024. Other markets, like stocks, went through ups and downs, but gold prices, by and large, were steady this year. This was good news for investors who wanted a safe place to put their money.
“2024 was a year which saw record highs for gold and continued stability,” explained Rick Kanda, managing director at The Gold Bullion Company. “Conflicts in Ukraine and the Middle East drew investors toward gold as a safe haven asset and Central Bank purchases around the world have also supported prices.”
Strong demand meant gold prices stayed high. Central banks bought large amounts of gold, and individual investors also turned to it to protect their money.
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Usually, when inflation increases, people start buying gold. That’s because it keeps its value better than cash. Gold followed this pattern in 2024 — as the cost of living rose, the price of gold did, too.
“Gold has continued on a bull run in late 2024 despite dramatic drops in inflation levels since the middle of the year,” Kanda said.
What’s interesting is that gold prices have stayed high, even as inflation has started to slow. General uncertainty about the direction the economy is going might be what’s keeping gold prices from dropping. It could also mean gold has found a new, higher price level that it’s going to stay at for now.
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Gold prices are also affected by interest rates. When rates are high, gold isn’t as appealing, because, unlike other investments, it doesn’t earn any interest. In 2024, interest rates mostly either went up or stayed stable. This kept a limit on how high the price of gold could climb.
Kanda explained: “The Federal Reserve has begun cutting interest rates already recently and so far the impact hasn’t been too dramatic on gold prices, but if they look to continue this approach we may see a larger effect.”
If rates drop sharply in 2025, gold prices could drop, too. When rates are lower, riskier investments, like stocks, become a lot more attractive, while gold becomes less so.
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