Since 2025, the international gold market has been experiencing significant fluctuations, firmly positioned at high levelsIn 2024, gold prices soared dramatically, with the spot price of gold in London and the COMEX futures price each witnessing annual increases exceeding 27%, marking the largest annual gains since 2010. This surge in gold prices brought it to the forefront as one of the most attractive investment assets of the year.

Looking ahead to 2025, several industry experts have pointed out that with the global economic outlook still uncertain, compounded by ongoing geopolitical conflicts, the macroeconomic environment remains favorable for goldCentral banks around the world are expected to continue their gold-buying strategies, suggesting that there is still considerable room for enhancement in gold allocations across global marketsAs a strategic asset, gold's positioning appears to be firmly established.

Entering a New Bull Market Cycle in 2024

"The gold market in 2024 showcased its most robust performance in over a decade, evidenced by remarkable price surges," remarks Liu Yuxuan, a senior analyst at Guotai Junan Futures

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The data indicates that by closing remarks for the year, London’s spot gold price and COMEX futures ended at $2,624.16 per ounce and $2,639.3 per ounce, respectively, reflecting impressive annual growth rates of 27.23% and 27.39%—a record high since 2010.

Throughout the year, there were distinct phases in this bull marketThe initial wave of growth witnessed gold prices increase from around $2,000 per ounce to exceeding $2,400 between late February and May 2024, largely driven by expectations of "re-inflation" in the market.

The subsequent surge began in July 2024, taking prices from the $2,400 mark to the vicinity of $2,600. This was primarily due to signs of a weakening U.Seconomy that commenced in mid-to-late May, alongside a declining dollar index and falling interest rates.

The third price escalation occurred around September 2024, where gold reached $2,800 per ounce before fluctuating around $2,640. Following September, fears of an economic recession in the U.S

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resurfaced, but as seasonal factors dissipated, market sentiment stabilizedAs the fourth quarter approached, rising inflation expectations in the U.Sprompted a resurgence in commodity prices, including goldHowever, these uncertain factors gradually waned as the dollar strengthened, leading to a rapid decline in gold prices.

"Reflecting on the price trajectory of 2024, despite appearing as a straightforward upward market trend over the year, the primary driving forces behind price increases varied at different stages," Liu Yuxuan statesThis scenario highlights not only the complexity of gold's "stage-specific driving logic" but also underscores the importance of monitoring "inflation sensitivity" and the significant changes in the investor base fueling demand for gold.

"The gold market in 2024 managed to extricate itself from the constraints of a strong dollar and high U.Sbond yields, marking the commencement of a new upward cycle," asserts Xu Ying, Chief Macro Strategy Analyst at Dongzheng Derivatives Research Institute

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Reviewing the surging gold prices, both the pricing logic of gold and the composition of market participants underwent notable changes, diminishing the explanatory power of prior analytical frameworks for gold prices and shifting the market focus to encompass more than just the performance of the U.Seconomy and Fed interest rate cuts.

Ongoing Positive Support Factors for Gold Prices

The recent climb in gold prices can be closely attributed to the purchasing behavior of central banks, existing market demand for gold, Federal Reserve interest rate policies, and evolving geopolitical landscapesThe pivotal question for 2025 is how these dynamics will unfold.

"Central bank gold purchases remain the most significant influence on the gold market, and it is anticipated that substantial acquisitions will continue in 2025 and beyond," notes Ming Ming, Chief Economist at CITIC Securities

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The implications of these purchases on gold prices manifest through actual market dynamics in supply and demand and the signaling effect of purchases announced to the public.

Ming distinguished three categories of countries that have increased their gold reserves in recent years: nations on the fringe of conflict zones, neutral countries maintaining amicable relations across the board, and those viewed as geopolitical adversaries by the U.SAnalysis suggests that the rise of de-globalization sentiments and increasing geopolitical tensions will bolster continued gold purchases by central banks in these nations, as they seek to further de-dollarize or mitigate related risks.

On the demand side, Ming believes that the enthusiasm for global gold investment will persist into 2025, with a potential shift in structure revealing a trend of "declining interest in Asia, growing interest in Europe and America." In early 2024, Asian investors were heavily involved in the gold market during the price uptick, but as expectations around the Chinese economy improved, this demand might gradually wane

However, due to poorer growth expectations in Europe and the ability for European and American investors to engage more directly in gold pricing, an increase in European demand for gold in 2025 could provide upward pressure on prices.

Xu Ying predicts that in 2025, U.Seconomic growth will slow, with the employment market potentially shifting from boom to bust; however, the process of inflation resolution may stagnate, contributing to increased inflation pressureThe Federal Reserve's monetary policy will likely face a balancing act between stabilizing economic growth and combating inflation, while ongoing fiscal challenges, including rising government debt, could exacerbate the situationConsequently, the foundational characteristics of gold as a monetary asset are supported by these factors, leading to a prolonged bullish trendFurthermore, the outlook for global economic growth remains fraught with uncertainty, combined with ongoing geopolitical tensions, creating a macroeconomic climate that remains conducive to rising gold prices

Central bank purchases of gold are expected to continue bolstering long positions, maintaining golden asset allocations across global markets.

Institutions Optimistic About Gold Prices in 2025

After the substantial increase seen in 2024, is it still worth participating in the gold market in 2025?

Ming envisions that based on projections of various influencing factors for gold prices, under neutral assumptions, the COMEX gold futures price is expected to reach $3,175 per ounce by mid-2025, fluctuating within a projected yearly range of $3,000 to $3,250 per ounce.

Xu Ying assesses that the significant narrative around Federal Reserve interest rate cuts is nearing completion, with macroeconomic stories partially realizedIn 2025, he anticipates that international gold prices may still attain an increase of around 20% to 30%, operating within a range of $2,500 to $3,300 per ounce, with an expected central price level rising to $3,000 per ounce.

Liu Yuxuan predicts that gold prices will predominantly experience a strong oscillation trend in 2025. However, achieving a consistently smooth upward trajectory throughout the year may be challenging, likely disrupted by adverse factors such as "strong dollar driven by tariffs" and "the closure of interest rate cuts." The primary focus will revolve around the Federal Reserve's path for interest rate adjustments

Based on insights into future scenarios, Liu anticipates that gold prices will maintain a strong oscillation in the first quarter, potentially fluctuate downwards in the second quarter, then adjust through the third quarter, culminating in a possible rebound in the fourth quarter, with new highs likely materializing within the first half of the year.

Lastly, Liu Shiyao, a precious metals researcher at Zijin Tianfeng Futures, believes the macroeconomic landscape in 2025 seems favorable for the gold market, maintaining an optimistic stance toward future gold pricesThe core arguments surrounding inflation resistance and interest rates will continue to underpin price increasesIn the latter half of the year, as measures such as tariffs and immigration policies gradually take effect, inflation risks may escalate, intensifying "hawkish" inclinations from the Federal Reserve, potentially resulting in smaller price increases compared to the first half.