Gold (GC=F) has had a bumper year in 2024, climbing to new highs and setting records. However, the question among investors is can it push higher in 2025?
The precious metal has broken record after record, rising more than 30% in 2024 while hitting an all-time high of $2,748.23 in October. It is currently trading around the $2,600 mark.
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Gold will rally to a record next year on central-bank buying and US interest rate cuts, according to Goldman Sachs (GS), which listed the metal among its top commodity trades for 2025 and said prices could extend gains during Donald Trump’s presidency.
Goldman Sachs expects gold prices to jump to $3,000 per troy ounce, an increase of 19% from the current level, if concerns over US fiscal sustainability grow. The yellow metal acts as a good hedge against inflation and rising geopolitical tension.
“Go for gold,” analysts said in a note, reiterating a target of $3,000 an ounce by December 2025. The structural driver of the forecast is higher demand from central banks, while a cyclical lift would come from flows to exchange-traded funds as the Federal Reserve cuts, they said.
Gold prices have increased sharply over the previous 12 as investors have piled in, seeking to protect their portfolios.
In the view of Goldman Sachs’ analysts, this rally could now be set to continue, despite expectations of continued increases in the value of the dollar.
“We push back on the common argument that gold cannot rally to $3,000/toz by end-2025 in a world where the dollar stays stronger for longer,” Goldman Sachs’ analysts said.
Instead, Goldman’s analysts said they expect gold prices will mainly be determined by the extent to which the US Federal Reserve cuts interest rates.
“In our base case, we see a 7% boost from 125 basis points of additional Fed cuts to the end-2025 gold price,” Goldman’s analysts said.
Interest rate cuts typically drive up demand for gold by reducing the attractiveness of government bonds and other interest-yielding assets.
A stronger dollar could also encourage gold purchases by central banks from across the globe seeking to restore confidence in their own currencies, Goldman’s analysts said.
“Key buyers like China, with large dollar reserves and a long-run strategic interest in diversification, may even increase gold demand during periods of local currency weakness to boost confidence in their currency,” the analysts said.
Uncertainty related to heightened geopolitical tensions and the potential for tariffs from the US could further increase the attractiveness of gold as a safe haven, the analysts said.
“Geopolitical shocks, including tariffs, typically boost both gold and the dollar,” Goldman Sachs’ analysts said.
UBS strategists predict that gold’s value will increase heading into 2025. Since the start of 2024, gold prices have risen by 28%, outperforming the S&P 500 (^GSPC). UBS strategists believe several factors will continue to drive prices higher in 2025, including central banks’ ongoing gold accumulation as part of their diversification strategies.
According to International Monetary Fund (IMF) data, global central banks made their largest gold purchases of the year in October. UBS now forecasts 982 metric tons of gold will be bought in 2024, up from its previous estimation of 900, and well above the post-2011 average of 500 metric tons.
There is also growing demand from investors seeking reassurance due to uncertainties like Donald Trump’s fiscal, trade, and geopolitical policies, along with ongoing conflicts in Ukraine and the Middle East. These factors are driving demand for safe-haven assets, boosting inflows into gold exchange-traded funds.
UBS (UBS) forecasts gold to reach $2,900/oz by the end of 2025 and recommends a 5% allocation within a USD-based balanced portfolio for diversification.
Global gold demand swelled by about 5% in the third quarter, setting a record for the period and lifting consumption above $100bn for the first time, according to the World Gold Council.
How do I invest in gold?
A worker polishes gold bullion bars ·DAVID GRAY via Getty Images
Gold falls under the category of alternative investments, named after their nature as alternatives to traditional investment assets such as bonds and equities. These can be anything from art to property, hedge fund investments, gold, and gold funds, and even digital assets.
For those wanting to protect their investment portfolio from market uncertainty, it is worth considering gold. Anyone can invest in physical gold in the form of bars and coins.
However, it might be easier and cheaper to invest in gold through Exchange-traded funds (ETFs) or Exchange-traded commodity (ETC) products. Another option is to invest in shares of gold mining companies, which can yield dividends as you are investing in a business rather than just the precious metal.
Should you buy gold coins or bars?
A Gold Britannia 2023 gold coin ·picture alliance via Getty Images
It is probably the first image on our mind when we think about the precious metal: a gold bar or coins. If you go down this route, you are investing in the physical metal. Gold coins are a popular choice, but mostly for collectors, as you will pay a premium for the design that you might not get back. However, some coins become more desirable for collectors over time, so this gambit could pay off.
If you're not bothered by the aesthetic value of gold, the straight way to go about it is to get a cast bar. A 500g bar will set you back £34,074.37 if you purchase it from the Royal Mint.
Rick Kanda, managing director at The Gold Bullion Company, said: “Despite coins being viewed as the obvious choice for first-time value, small and first-time investors should look into both coins and bars.
“Manufacturing costs for bars are generally lower than those for coins, resulting in lower purchase prices per gram for gold bars. This could help maximise your profits if you go on to sell at a later date.”
You can start smaller, with a 1g Britannia bar coming in at around £91. Regardless of what you get, ensure that the purity is above 99.9% for coins and 99.95% for bars so that it is VAT-free.
Gold and other precious metals are often weighed in troy ounces. At 31.1034768 grams, one troy ounce is about 10% heavier than a regular ounce.
Another thing to consider, often misunderstood, is the capital gains tax-free nature of British legal tender coins.
"The sovereign and the gold and silver Britannia have a unique place as precious metal coins with a legal tender value. This means that any profits made over the lifetime of the investment are free of CGT when sold. Many clients overlook this issue as they are so concerned about purchasing physical metal and do not think about the other side, which is relevant when they come to sell," Paul Atkinson, co-founder at Atkinsons Bullion & Coins, told Yahoo Finance UK.
"A 500 gram gold bar would be subject to tax as much as 28% CGT when sold. The equivalent in gold Britannias or Sovereigns would not. There was an argument that a bar was cheaper when you purchase in the first place but that difference was a maximum of 1%, not 28%. In the current market you can buy coins as cheaply (low premiums) as a bar," he added.
How to invest in gold via ETFs or ETCs
Gold-backed ETFs free consumers from the considerations that need to be made when purchasing physical gold ·monsitj via Getty Images
If you look at gold purely as an investment and do not want to handle things like storage or purity levels, you can choose to invest in an ETF or ETC.
These investment products are funds that consist of only one asset: gold. They trade just like a normal stock but get their value from holding "underlying assets" centred on the precious metal, such as physical gold, gold futures, or exposure to companies that mine the metal.
The main costs of investing in gold ETFs will be the ongoing charge and any platform fees. You should also pay attention to where the product trades. Most physical gold is priced in US dollars, so if an ETF or ETC operates in sterling, then the USD/GBP (GBP=X) rate will likely play a significant role in its performance.
Looking at gold ETFs traded in the USA, the DB Gold Double Long Exchange Traded Notes (DGP) has returned 53% this year.
ProShares Ultra (UGL) has delivered 49% and Invesco DB Precious Metals Fund (DBP) has recorded a 28% gain since January.
If you want to keep things in pounds, you some of the top gold ETFs in the UK include the Invesco Physical Gold ETC (SGLPL.XC), that comes with a 0.12% fee, and aims to replicate the spot price movement of gold bullion as closely as possible.
There is also the iShares Physical Gold ETC (SGLNL.XC), for the same fee. This product has the particularly of only accepting gold bullion that meets the Good Delivery standards set by the London Bullion Market Association (LBMA). All assets are classified as responsibly sourced, only allocating gold that was mined after 2022.
If you’d prefer a fund, Troy Trojan (0P00002AVE.L) is on Hargreaves Lansdown’s (HL.L) top funds to watch in 2025 list.
Victoria Hasler, head of fund research at Hargreaves Lansdown, said that the managers of the Troy Trojan fund "manage to take advantage of the attributes of gold without putting all their eggs in one basket,”
The Troy Trojan fund had 12.6% exposure to gold-related investments as of the end of November, including its top positions in the Invesco Physical Gold (SGLD.L) and iShares Physical Gold (SGLN.L) exchange-traded commodities.
However, other major holdings in the fund include consumer goods company Unilever (ULVR.L) and tech giant Alphabet (GOOGL, GOOG).
"Rather than trying to shoot the lights out, the fund aims to grow investors' money steadily over the long run, while limiting losses when markets fall," said Hasler.
Over the past year, the fund has generated a return of 8.5%, which is higher than the 3.5% increase in the UK retail price index but behind the 15.8% rise in the FTSE All-Share (^FTAS) index.
Best gold stocks and how to invest in mining companies
A worker displays a gold nugget inside a smelting facility ·REUTERS / Reuters
Gold-oriented stocks and shares provide exposure to the commodity without the cost of buying and storing it.
You are investing in a company, just like you would do with any other listed business, but in this case, you secure exposure to gold and could potentially achieve higher returns as gold companies expand production and reduce costs, which can drive profits. As you own shares in the company, you could also be in line for dividends.
In the US, Galiano Gold (GAU), Equinox Gold (EQX) or ElDorado Gold (EGO) shares have a track record of delivering dividends to investors. Barrick (GOLD) is also a household name for gold investors.
Again, if you prefer to keep your investments UK-bound, there is Empire Metals (EEE.L), Serabi Gold (SRB.L) or Resolute Mining (RSG.L).
As always, past performance is no guarantee of future results, and gold should be part of a diversified portfolio.
Which country is the biggest buyer of gold?
In 2023, global gold demand surged to a record 4,899 metric tonnes, with jewellery accounting for 46% of this demand, according to figures from the World Gold Council.
China emerged as the world's leading consumer, using 959 metric tonnes of gold last year. India followed closely as the second-largest consumer, with total consumption reaching 761 metric tonnes. The US rounded out the top three, consuming 250 metric tonnes of the precious metal.
When it comes to financial reserves, the US holds the top position globally with 8,133 metric tonnes of gold. Germany follows with 3,352 metric tonnes, and Italy maintains 2,452 metric tonnes. Several countries, including Kazakhstan and Russia, have been actively increasing their gold reserves in recent years.
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