Gold Set for 'Much More Modest' Growth in 2025, World Gold Council Says

As the year 2024 comes to a close, investors are looking ahead to 2025, and the World Gold Council has some insights to share about the precious metal's outlook. According to their latest report, gold is expected to experience 'uch more modest' growth in the coming year. This article explores the factors contributing to this prediction and what it means for investors.



The World Gold Council's outlook for 2025 suggests a more subdued growth for gold compared to previous years. This shift can be attributed to several factors, including changes in interest rates, central bank demand, and geopolitical risks.



1. Interest Rates: The trajectory of interest rates, particularly the Fed funds rate, will significantly impact gold's performance in 2025. According to the Gold Valuation Framework, a 100bp decrease in the Fed funds rate by year-end could lead to a rangebound gold performance with slight upside, while a 5.5% rate by year-end would bring downside pressure. Conversely, a dovish Fed with a 3% rate by year-end could result in notably higher gold prices.
2. Central Bank Demand: Central bank demand has been a significant driver of gold's performance in recent years. In 2024, central banks added 373.5 tonnes of gold to their reserves, the highest level since 1967. However, the World Gold Council expects this demand to slow in 2025, contributing to the 'uch more modest' growth outlook for gold. Geopolitical risks and market volatility may influence central bank demand, as gold serves as a hedge against uncertainty.
3. China's Role: China's central bank gold purchases have been a significant driver of global gold demand. In 2024, China's gold reserves increased by 18.8% to 2,068.16 metric tons, making it the world's largest gold holder. This trend is expected to continue, with China's gold demand forecasted to grow by 10% in 2025. However, the World Gold Council predicts a 'uch more modest' growth for gold in 2025, suggesting that China's influence may not be as pronounced as in previous years.

In conclusion, the World Gold Council's outlook for gold in 2025 suggests a 'uch more modest' growth, driven by factors such as interest rates, central bank demand, and geopolitical risks. Investors should consider these factors when making decisions about their gold investments in the coming year. As always, it is essential to stay informed and adapt to the ever-changing market landscape to maximize returns and manage risks.