Gold Prices

Before we look at what could happen, let's do a quick recap on how gold performed in the last 12 months. 2024 was an eventful year for gold. The price of gold went up around 30% ending at $2648 per ounce.  Many factors contributed to this, including political uncertainty as a result of the recent election, cuts by the Federal Reserve during the last two quarters, strong gold buying by central banks and conflicts in eastern Europe and the Middle East.

So, the big question is: will this trend continue into 2025?  There is no magic crystal ball, but there are things to keep an eye on that will affect both the price of gold and silver.

Many believe that the Federal Reserve will continue to cut interest rates in hopes of stimulating the economy.  Historically, when interest rates are expected to drop, gold value tends to rise.  The rate of cuts over the next year is uncertain.  This is also true when the cost of inflation goes up. With inflation still around the 2% Federal Reserve target, we may see the US economy expand faster than we expect.  The interest rate cuts, along with new tariffs, tax and immigration policies will have a influence the local economy. Since gold is not only influence, by interest rates and inflation, we must think beyond just out local economy.  

Gold is considered a safe investment to hedge against the impact of inflation which will take time to level off.  We will not see inflation flatten off immediately in 2025 and it will take time for the new policies to have impact one way or the other.

Additionally, Trump’s global plan to implement tariffs and his American First policy may cause a weaker US dollar.  Since large portion of the global economy transact using the US dollar, including the international gold market, a weakened US dollar would be a positive for foreign gold investors as they can by US dollars for less and then use those dollars to buy gold thus causing the gold price to be driven up.

China has seen a huge boost in their economy over the last few years.  If their economy begins to shrink due to tariffs and less importing of Chinese goods, we will see an global impact.  Additionally, China has implemented moderately looser monetary policy and that may lead to higher inflation expectations, a weaker yuan, and potential economic instability in their country.

Economists are cautiously optimistic about commodities. While some will see a sluggish market, the overall outlook for commodities in 2025 remains optimistic due to varied monetary policies, continued demand for energy and industrial metals, and opportunities in agriculture due to some of the global political tension and a refocus on America First.

In 2025, we will have to wait and see what policies are implemented by the new administration – possible trade tariffs, restrictive immigration policies, and potential escalation in international disputes – could mean prices stay high.

These are all key macroeconomic factors that have impacts on everything from gold to stocks, bonds, energy bills and the cost of living.  

Who knew gold was impacted by so many things within the economy and world? With the numerous changes expected, gold will likely fluctuate through the year while it will trend upwards.