Gold’s breakneck rally is showing no signs of abating, driving the precious metal higher by 51% so far in 2025. Central bank buying, increased demand from gold-backed ETFs, a weaker dollar and growing interest from retail investors amid rising trade and geopolitical risks have been behind the bull run in gold prices.
With the gold prices scaling fresh highs every day, global brokerage Goldman Sachs expects the yellow metal to rise to $4900 by the end of December next year, a rise of over 23% from current levels.
On Tuesday, spot gold hit a new peak of $3,977.19 in the international market.
According to a Bloomberg report, Goldman Sachs expects central bank buying to average 80 metric tons in 2025 and 70 tons in 2026, saying emerging market central banks are likely to continue the structural diversification of their reserves into gold.
China’s central bank added gold to its reserves in September for the eleventh straight month, data from the People’s Bank of China showed.
Meanwhile, western ETF holdings are expected to rise as the US Federal Reserve is seen lowering the funds rate by 100 basis points by mid-2026, according to analysts at Goldman Sachs.
In the near term, markets are still pricing in an additional 25 basis-point rate cuts by the US Federal Reserve in both October and December, with probabilities of 93% and 82%, respectively, according to the CME FedWatch tool.
“We see the risks to our upgraded gold price forecast as still skewed to the upside on net, because private sector diversification into the relatively small gold market may boost ETF holdings above our rates-implied estimate,” Goldman Sachs said as per the report.
Gold tends to gain amid a low-interest environment and amid rising global uncertainties.
Should you buy gold now?
For investors wondering if gold is still worth buying at these elevated levels and after a massive run-up, Deveya Gaglani, Senior Research Analyst – Commodities, Axis Securities, offers a positive view.
“Comex Gold surged nearly 2% in the previous session, driven by renewed safe-haven demand amid the US government shutdown, escalating geopolitical tensions, and a softer dollar index. Prices in the spot market edged closer to record highs around the $3,970 mark. The short-term outlook remains constructive as long as the $3,900 support level holds. In the Domestic market, prices are trading above the ₹120,000 level, which is a bullish sign for prices,” Gaglani noted.
We expect prices to remain volatile this week as traders will closely monitor the FOMC Minutes and Core CPI data, he added.
(With inputs from Bloomberg)
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
