The price of gold has long been a captivating subject, sparking intense interest among investors seeking to diversify their portfolios and the general public intrigued by its allure. As a precious metal renowned for its rarity, durability, and malleability, gold has played a pivotal role throughout human history. From being used as a form of currency in ancient civilizations to serving as a hedge against economic uncertainties in modern times, its significance in the global economy is undeniable.
In this article, we embark on a comprehensive exploration of the multifaceted factors that will shape the future price of gold. Additionally, we’ll venture into making informed predictions about its trajectory in the ever-evolving financial landscape.
The Current Situation of Gold Prices
In recent days, gold prices have shown a significant upward trend. On April 16, 2025, the international spot gold price broke through the $3260 – per – ounce mark, and the New York gold futures climbed to $3288 per ounce, with an intraday increase of over 1.4%. In the domestic market, the main contract of the Shanghai Gold Exchange was quoted at 774.54 yuan per gram, with a premium of about 66 yuan per gram compared to the international gold price, reflecting the dual support of the RMB depreciation pressure and investment demand. This upward trend began at the beginning of the year. The COMEX gold futures have soared from $2600 per ounce to $3260, with a cumulative increase of 25%.
Factors Affecting the Future Price of Gold
Geopolitical and Economic Uncertainties
The world is currently facing numerous geopolitical and economic challenges. Conflicts such as the Russia – Ukraine conflict and the Middle East situation remain unresolved, and trade frictions and policy uncertainties also exist. These factors have led to increased market panic, and investors tend to turn to gold as a safe – haven asset. For example, the Trump administration’s tariff policies have brought great uncertainty to the global economic and trade situation, making the market more risk – averse and increasing the demand for gold. In the first quarter of 2025, global gold ETFs had a net inflow of 226 tons, reaching a three – year high, indicating the strong demand for gold from investors worldwide.
Central Bank Gold Purchases
Central banks around the world have been systematically increasing their gold reserves to hedge against the credit risk of the US dollar. In 2023, the global central bank gold purchases reached 1037 tons, and the People’s Bank of China has continuously increased its holdings for 5 months. By the end of March, its gold reserves reached 73.7 million ounces. As “rigid buyers”, central banks’ long – term demand for gold is a structural force supporting gold prices. Their continuous purchases of gold not only increase the overall demand for gold in the market but also enhance investors’ confidence in gold.
Weakening of the US Dollar and the Shift in the Federal Reserve’s Policy
The Trump administration’s policy volatility has weakened the credit of the US dollar, and the market’s expectations for the Federal Reserve’s interest rate cuts have increased. It is expected that the Federal Reserve will start two interest rate cuts in the second half of the year. The decline in real interest rates reduces the opportunity cost of holding gold. In addition, the negative correlation between the US dollar and gold has weakened, and the trend of gold strengthening against the US dollar highlights the market’s doubts about the US dollar’s safe – haven properties. When the US dollar weakens, gold becomes more attractive to investors holding other currencies, which in turn drives up the price of gold.
Inflation and Asset Allocation Logic Changes
The inflation expectations in the United States have risen to 3.58%, and the probability of the economy “not landing” or stagflation is increasing. Gold, as an inflation – resistant asset, has become more attractive. Morgan Stanley analysis shows that investors are using gold to replace US bonds to hedge risks, and the performance and valuation of gold stocks are expected to increase simultaneously. In an inflationary environment, the real value of paper currency – denominated assets such as stocks and bonds may decline, while gold can maintain its value and even appreciate, so it is favored by investors.
Speculative Capital and Technical Breakthroughs
The net long – position in gold futures has remained at a high level of 170,000 lots. After the technical breakthrough of the key resistance level of $3200, program – trading buy – orders have been triggered, and the short – term support level has risen to $3250, further opening up the upward space. The influx of speculative capital has also played a role in promoting the rise in gold prices in the short term. Technical breakthroughs often attract more investors to enter the market, further pushing up prices.
Predictions of Gold Prices by Different Institutions
Bullish Predictions
Goldman Sachs: Goldman Sachs has significantly raised its gold price forecast. It has increased the 2025 – year – end gold price target from $3300 per ounce to $3700 per ounce, and the expected trading range is $3650 – $3950. In an extreme situation, if central bank demand continues to rise to 110 tons per month, ETF holdings rebound to the level during the epidemic, and speculative positions reach the top of the historical range, gold may even approach $4500 per ounce, although this is considered a low – probability event.
UBS: UBS expects that the gold price will reach $3500 per ounce in the next 12 months. It believes that a 5% allocation of gold in an investment portfolio can effectively hedge risks.
State Street Global Advisors: It points out that there are five structural tailwinds, namely, de – dollarization, stagflation, policy uncertainty, etc., and the long – term target price is set at $4000 – $5000 per ounce.
Neutral Predictions
Deutsche Bank: Deutsche Bank predicts that the average gold prices in 2025 and 2026 will be $3139 per ounce and $3700 per ounce, respectively. It believes that the long – term bullish logic of gold remains solid, but it also needs to pay attention to short – term fluctuations and policy – adjustment risks.
Bearish Predictions
Some Analysts: Some analysts believe that if the global economic data exceeds expectations and improves, or the Federal Reserve turns hawkish, the gold price may pull back to below $3200. In addition, the tightening of China’s gold – import policy or the appreciation of the RMB may also suppress the premium space of gold.
Conclusion
In general, the future price of gold is affected by multiple factors, and its trend is complex and changeable. In the short term, gold prices may experience fluctuations due to technical adjustments, changes in market sentiment, and policy – related factors. However, in the medium and long term, with the continuous existence of geopolitical uncertainties, the weakening of the US dollar’s credit, the increase in central bank gold purchases, and the rise in inflation expectations, gold is expected to maintain an upward trend. Although different institutions have different predictions on gold prices, most institutions are bullish on gold in the medium and long term.
Investors can consider appropriately increasing the proportion of gold in their investment portfolios according to their own risk tolerance and investment goals to achieve the purpose of hedging risks and preserving value. It should be noted that the above content is only for reference and does not constitute investment advice. The gold market is volatile, and investors need to make decisions based on a comprehensive consideration of various factors.
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