Gold expected to see "moderate gains" in 2025 - RBC Capital Markets

Gold  prices are tipped to see moderate gains in 2025 thanks to ongoing uncertainty around economic growth and inflation risks supporting demand from central banks and investors, according to analysts at RBC Capital Markets.

The yellow metal experienced a turbulent end to the prior year due in part to caution around more Federal Reserve interest rate cuts, which contributed to an uptick in nominal and real bond yields.

Meanwhile, US President-elect Donald Trump has outlined plans to introduce sweeping import tariffs and institute more protectionist trade policies, which some economists have predicted could push up inflation. This could lead the Fed, which slashed rates by three times in 2024, to ratchet down borrowing costs at a slower pace this year. The central bank now foresees only two reductions in 2025.

Although bullion typically serves as a hedge against inflation risks, elevated interest rates can lift the US dollar and dent the appeal of non-yielding assets like gold.

Still, gold prices jumped by around 27% in 2024, a return which the RBC analysts led by Josh Wolfson noted surpassed broader equities and commodities. Average prices for the metal gained 23% annually to $2,390 per troy ounce, representing the ninth yearly increase.

The analysts forecast that gold would register a "positive" annual performance in 2025 as investors' appetites remain whetted by "economic uncertainty (global growth, inflation risks, Fed outlook), geopolitical tensions (deglobalization, conflict, trade protectionism), and persistently high global sovereign debt."

"Additionally, we note that concerns over higher yields are largely predicated upon a narrative of increasing inflation risks, including risks of US trade protectionism, immigration policy changes, and ongoing high budget deficits, all of which stand to benefit gold."

Gold prices are estimated to rise to an average of $2,823 per ounce annually and $2,873 per ounce in 2026, and then retreat from that level over the following two years, the RBC predictions showed.

Source: Investing.com