Gold is proving to be the best-performing asset in 2025, outshining equities and Bitcoin. According to Ventura Securities, gold has surged 11% this year and is on track to cross $3,080 per ounce in first quarter of 2025.
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Why is gold rallying?
Several factors are driving gold’s record-breaking run:
Safe-haven demand: Rising US trade tariffs and policy uncertainties have increased the appeal of gold as a hedge.
Central bank buying: Central banks acquired 1,045 tons of gold in 2024, marking the third consecutive year of purchases exceeding 1,000 tons.
Tariff concerns: Reports of potential tariffs on gold have sparked a rush to secure physical metal, particularly in London, Switzerland, and Asia.
Inflation and recession fears: Governments anticipate higher fiscal deficits, which could drive inflation and increase gold demand as a store of value.
Geopolitical uncertainty:
Rising global tensions and economic instability further boost investor interest in gold.
Spot gold recently hit a record high of $2,943 per ounce, while Comex gold touched $2,968 an ounce.
Ventura Securities forecasts that gold is heading toward $3,000 per ounce and could surpass $3,080 per ounce soon.
Headwinds for gold
Despite strong demand, some factors are capping bigger gains:
Strong US dollar and treasury yields: A resilient dollar and elevated bond yields make non-yielding assets like gold less attractive.
Federal Reserve Policy: Fed Chair Jerome Powell has signaled no urgency in cutting interest rates, which limits gold’s upside.
Inflation and CPI data: The US Consumer Price Index (CPI) inflation rate for January was 3.0% year-over-year. A stronger CPI report could strengthen the dollar, putting pressure on gold.
Powell stated, “If the economy remains strong and inflation does not sustainably move toward 2%, we can maintain policy restraint for longer.” This means gold may continue experiencing volatility but remains bullish as long as uncertainty persists.