As we approach the end of 2025, gold prices are projected to soar to unprecedented heights, with estimates suggesting they could reach $2,800 per ounce by year-end and possibly hit $3,000 in the following year. Financial services powerhouse UBS has provided these insights, highlighting critical factors influencing the gold market that are particularly relevant to jewelry enthusiasts and investors alike.
The anticipated rise in gold prices is driven by several interconnected factors. The recent rate-cutting cycle initiated by the US Federal Reserve, alongside major central banks, is expected to exert upward pressure on gold valuations. A weakening US dollar index, compounded by ongoing geopolitical tensions, has created an environment where gold is increasingly seen as a safe haven for investors.
“Many central banks continue to accumulate gold, which boosts investor confidence. Market positions remain relatively low, indicating considerable room for increased holdings, and institutional investors are displaying a growing appetite for gold,” explained Sharon Ding, head of China Basic Materials at UBS.
Gold has already reached remarkable highs this year, with the London Bullion Market Association (LBMA) reporting an average auction price for the third quarter that was 28% higher year-on-year, setting a record at $2,474 per ounce. Furthermore, total gold supply for this period rose by 5% year-on-year, reaching an all-time high of 1,313 metric tons, according to the World Gold Council (WGC).
While gold prices are on the rise, the impact on various gold assets has shown diverse trends. In the third quarter, global investments in gold bars and coins decreased by 9% year-on-year, totaling 269 tons. Similarly, gold jewelry consumption experienced a decline of 12% year-on-year, despite growth in the Indian market. In contrast, global gold exchange-traded funds (ETFs) saw a substantial inflow of 95 tons, reflecting shifting investor strategies.
Interestingly, while central banks slowed their gold buying pace in the third quarter, year-to-date purchases remain consistent with 2022 figures, highlighting the widespread and enduring demand for gold.
As we approach the year-end, the demand for gold coins and bars may receive a boost from potential local interest rate cuts, supporting gold investment interest. However, investments in gold assets might face competition from other domestic investments as economic stimulus measures unfold. The trajectory of gold prices will undoubtedly remain a critical factor in shaping future investment demand.
In conclusion, as gold prices continue to climb, jewelry lovers and investors alike must navigate this evolving landscape with care. Understanding the intricacies of the gold market will not only enhance appreciation for fine jewelry but also inform smarter investment decisions in this precious metal.
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