Gold has been valued for its stability when the financial fires are increasing. That stable nature was highlighted in 2024 when its price went up, winning over $700 per ounce. This was a 34% increase from January. The sharp rise in prices has made traders and investors concerned about gold again, with the most important question among them: could gold cross the price point $3,000 by 2025? Kar Yong Ang, a financial market analyst at broker Octa, examines the topic.
Inflation, interest rates, and geopolitics
Gold prices are affected by inflation and interest rates. When inflation rises, investors tend to buy gold to protect their purchasing power. They see it as a much safer investment than stocks or bonds because stocks tend to fall in price suddenly, and bonds can lose value when interest rates rise due to high inflation. Historically, however, when real interest rates (which are adjusted for inflation) has declinedgold has just risen. As some would say, 'Buying is no better'.
By 2024, the percentage of total reserves held in gold by central banks reached 10%a significant increase from the 3% rate recorded just 10 years earlier. Although we are still in an era where most currencies are fiat reserves (for example, paper with little intrinsic value), it seems that an increasing number of central banks believe that holding gold adds an element of prudence to their reserve diversification strategy. Emerging economies, particularly in Asia, are seeing their central banks play an increasingly important role in the gold market. China (now holding 5% of its assets in gold), along with India, has emerged as one of the major buyers of gold.
In addition, the central banks of the emerging economies, from 2022, have increased the pace of gold purchases. The catalyst for this latest development was Russia's unprecedented asset freeze, which forced several countries to rethink their reserves.
In addition, the global shift towards a more sustainable economy, including investment in renewable energy and green technologies, is driving limited demand for certain materials, such as precious metals containing gold. Gold plays an important role in clean energy technologies, including solar panels and electronics for energy efficient systems. This increased demand for technological gold is exacerbated by growing concerns about the lack of resources necessary for the green movement.
In addition, geopolitical tensions and economic uncertainty reinforce the attractiveness of gold as a safe-haven asset, attracting investors seeking respite amid rapid changes in global markets. The Ukraine conflict, strained relations between the US and China, and unrest in the Middle East have sent investors scrambling for safe-haven assets. And when it comes to safe havens, gold is a time-tested destination. The record of price stability in today's unstable world is very different from the behavior of the stock market and other assets. An example of this is China's recent gold hoarding, which is now building up 5% of its foreign exchange reserves. This is another sign of a move towards tolerance in a global economy full of uncertainty.
Technical analysis: key levels to watch
According to the technical analysis, the price of the asset is still in the increase, even on a high time frame. The long-term bullish trend is also not changed for a bearish one. The $3,000 target, which corresponds to the 4.236 Fibonacci extension level, is very realistic. However, this level may be too ambitious for the current publication.
Outlook for 2025 – factors that will shape the future of gold
According to the Survey of Leading Economists from the World Economic Forumeconomists are uncertain about global economic stability. 54% of the respondents predicted a stable outlook and 37% the decline of the project. Future fiscal policies aimed at climate change, a changing demographic landscape, and ramped up defense spending are bound to push inflation up. All of these look to gold as an inflation hedge; however, it is not just private investors: central banks are also involved in the gold thing. They are expected to continue to add to their gold reserves and, despite all these other demands, are likely to maintain long-term demand.
Will gold hit the $3,000-per-ounce price in 2025? The situation seems very possible. However, for the asset price to reach a rather ambitious target, favorable market conditions are required. They include both macroeconomic and geopolitical factors. For example, the re-election of Donald Trump introduces additional variables into the equation. Trump's geopolitical stance, especially regarding global trade and conflict resolution, could affect investor sentiment and demand for a safe haven. If his promises regarding the resolution of several conflicts are fulfilled, investors can partially abandon safe assets for the most dangerous ones.
About Octa
Octa is an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and a variety of services used by clients from 180 countries which has opened more than 52 million trading accounts. To help its clients reach their investment goals, Octa offers free educational webinars, articles and analytical tools.
The company is involved in a wide network of charitable and humanitarian initiatives, including the development of educational infrastructure and short-notice relief projects supporting local communities.
Since its inception, Octa has won over 90 awards, including the 'Most Reliable Broker Global 2024' award from Global Forex Awards and the 'Best Mobile Trading Platform 2024' award from Global Brand Magazine.
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