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Gold Price to Rise to $3,000 an Ounce by 2025

Published by honor in category Market News on 18.06.2024
Gold price (XAU-GBP)
1,860.37 GBP/oz
  
- GBP0.57
Silver price (XAG-GBP)
22.50 GBP/oz
  
- GBP0.16

Analysts at Citibank and Bank of America, which are among the four largest banks in the US, predict that the price of gold will rise to $3,000 an ounce next year.

Citi analysts pointed out that strong physical demand, gold purchases by central banks and the macroeconomic situation will continue to support gold.

“Probably, gold price movements will not be linear, but average prices should rise both in the second half of this year and in 2025,” Citi analysts said. This means that there will be corrections, but in the longer term, gold is in an upward trend.

“In our opinion, there is very strong support in the market at $2,000-$2,200, and we expect gold to nominally test new records in the second half of the year. In 2025, however, the price could already rise to $3,000,” the bank announced.

Important Factors Supporting Precious Metals

They pointed out several important factors that support their thesis. “First, asymmetric market risks appear to persist as the price of gold has risen to $2,400 an troy ounce despite a strong US dollar, high interest rates and rising stock markets,” the analysts said.

“A negative turn in US economic growth should also be positive for gold. If everything else remains the same, more and longer-term bets will be placed on gold,”

the announcement said

“In the context of 6-12 months, Citi sees the risks being tilted towards a slowdown in the economy and lower bond yields. There is also a lot of uncertainty surrounding the US election, and a potential recession would push the US budget deficit even higher.

The optimistic outlook is supported by the belief that interest rates may have already peaked. If the Federal Reserve decides to lower interest rates, leading to an increase in US Treasury prices (as bond prices rise, their yields or interest rates fall), this would create a highly favourable environment for investing in gold in the long term.

Physical Demand Remains Strong

In addition, physical demand for gold remains very strong. Demand is particularly high from emerging market central banks, which have been significant buyers of gold bullion. And this trend is expected to continue.

Read more on the topic here: Record breaking demand for gold bullion in 2023

Citi also pointed to demand from China’s retail market, with the Chinese buying record amounts of gold. “Premiums in the Chinese gold market are small, suggesting that there has been a lot of demand built up over time that will persist,” the analysts said.

Read more on the topic here: China sells US treasuries and buys gold

Citi also expects good performance for other metals. Silver is expected to rise to $38 an ounce during the year, helped by strong industrial demand. In particular, silver is in high demand among manufacturers of solar panels and electric cars.

In the case of copper, the price per ton is seen to rise to $12,000 by the turn of the year. This is helped by China’s transition to green energy and the construction of the necessary infrastructure.

Bank of America: In Addition to Gold, Silver is Gaining Momentum

Last week, Bank of America also predicted that gold prices would rise to $3,000 per ounce. The average price of silver per ounce is expected to increase as well, reaching an average of $35 per ounce by 2026.

BofA analysts highlighted several factors supporting this forecast, including the anticipated end of raising interest rate hikes by central banks and the growing trend of investments in precious metals.

BofA analysts believe that despite this year’s rapid appreciation, precious metals still have significant growth potential, with gold expected to reach $3,000 per ounce by 2025

They also noted that investors seeking to buy shares in silver mining companies face challenges, as silver is often a byproduct of mining other metals, making it difficult to find companies that primarily mine silver in the short term and long term.

Read more on the topic here: The future of gold mining

“Unlike gold, it is difficult to find so-called pure silver mines,” the analysts wrote. They point out that even mines primarily focused on silver can earn less than 50 percent of their turnover from the white metal.

In this respect, some companies are highlighted in which you could consider investing. The bank has given a buy recommendation to both Pan American Silver (PAAS) and Wheaton Precious Metals (WPM).

Gold price (XAU-GBP)
1,860.37 GBP/oz
  
- GBP0.57
Silver price (XAG-GBP)
22.50 GBP/oz
  
- GBP0.16

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