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Gold prices are on track to reach historic levels in the first quarter of 2025, predicts the CEO of one of the world\u2019s largest independent financial advisory and asset management organizations.<\/p>\n
The bullish prediction from deVere Group\u2019s Nigel Green is driven by a confluence of factors reshaping global markets.<\/p>\n
He says: \u201cAs central banks continue aggressive buying, the US Federal Reserve cuts interest rates, and geopolitical tensions persist, the precious metal is primed for a bullish surge that could shatter previous records.\u201d<\/p>\n
Central banks around the world are accelerating their gold purchases at a pace not seen in decades. This trend, which initially gained momentum following the start of the Russia-Ukraine war, has broadened, with many countries shifting away from US dollar-denominated assets.<\/p>\n
\u201cGold buying has now surged to nearly three times the level it was before 2022, and the outlook suggests continued strong demand into 2025,\u201d notes the deVere CEO.<\/p>\n
\u201cThis wave of buying is not just about portfolio diversification \u2014 it\u2019s a strategic move to mitigate risks. Countries, especially those wary of US financial sanctions, are increasingly turning to gold to shield their reserves from political and economic pressures.”<\/p>\n
\u201cChina, for instance, has been a key player in this trend. In 2023, China\u2019s central bank added to its gold holdings for 10 consecutive months, underscoring the nation\u2019s intention to reduce its reliance on the dollar amidst growing geopolitical tensions with the West.”<\/p>\n
\u201cThis buying intensity continued well into 2024, with net purchases of 290 tonnes recorded in the first quarter of 2024 \u2013 the fourth strongest quarter of purchases since the buying streak began in 2022.\u201d<\/p>\n
Similarly, Turkey, Singapore, Brazil and India have also ramped up their gold reserves, driven by their need to safeguard against currency volatility and potential sanctions.<\/p>\n
The US Federal Reserve\u2019s shift from its aggressive interest rate hiking cycle toward rate cuts is another pivotal factor that will likely fuel a rally in gold.<\/p>\n
\u201cHigher interest rates make gold less attractive as it doesn\u2019t generate yield. However, with rates poised to fall, the tables are turning. Lower rates can often reduce the appeal of yield-bearing assets, drawing some investors \u2013 both retail and institutional \u2013 back into the gold market.\u201d<\/p>\n
In today\u2019s fragile global landscape, gold\u2019s role as a portfolio hedge remains as vital as ever. The potential for geopolitical shocks\u2014including escalating trade wars, sanctions, and heightened global tensions\u2014continues to loom large.<\/p>\n
\u201cGold offers unparalleled protection in such scenarios, especially as concerns grow around issues such as Fed independence, global debt sustainability, and financial sanctions,\u201d affirms Nigel Green.<\/p>\n
\u201cOne scenario that could send gold prices soaring is an escalation in financial sanctions comparable to the surge seen since 2021. Another potential trigger could be worsening debt fears in the US.\u201d<\/p>\n
He concludes, \u201cAgainst this backdrop, and should the current momentum be maintained, we could see new all-time price highs for gold in the first quarter of 2025.\u201d<\/p>\n
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