2025 Gold Price Outlook: Price Rise Scenario Driven by Weak US Dollar and Geopolitical Tensions

Gold prices continue to rise in 2025. Since the beginning of the year, they have increased by approximately 27% compared to the start of the year and about 39% compared to the same period last year, with domestic gold prices also up 43% from the same time last year. This is not merely a temporary phenomenon but the result of structural factors.

Three Key Variables Driving Gold Prices

Weakening Dollar and Accelerating De-dollarization

Movements to reduce dependence on the dollar in the international trade system are spreading. China is expanding the use of the yuan in trade settlements to enhance its international standing, and India is also promoting the internationalization of the rupee. Countries like Russia and Iran, which are under US sanctions, are accelerating the shift to gold and other currencies instead of the dollar. The weakening of the dollar’s international status inevitably leads to increased demand for gold and rising gold prices.

Deepening Geopolitical Uncertainty

Gold is a representative safe asset that preserves asset value during economic crises. The reasons for the sharp rise in gold prices during past crises—such as the 2008 global financial crisis, the 2011 Eurozone debt crisis, and the 2020 pandemic—are rooted in this. Currently, multiple risk factors, including US-China trade conflicts, the Russia-Ukraine war, and rising tensions in the Middle East, have increased investor preference for gold.

Weakening Economies in Developed Countries and Expectations of Rate Cuts

The US continues to face inflationary pressures, while Europe suffers from a lack of growth drivers, increasing the likelihood of central bank rate cuts. When interest rates fall, the yields on deposits and bonds decrease, making gold, which does not generate income, more attractive. As seen when the Federal Reserve cut rates by 50 basis points in September last year, causing gold prices to surge, further rate cuts are directly linked to rising gold prices.

Gold Price Outlook for 2025: Will the Bull Run Continue?

Predictions from Major Institutions Come True

Looking at forecasts from major financial institutions at the start of the year reveals an interesting picture. JP Morgan, Goldman Sachs, and Citi Group projected $3,000 per ounce, but this level has already been surpassed. The average forecast from banks and refineries compiled by the Financial Times was $2,795 at year-end, but the current gold price based on MTrade is $3,337 per ounce, significantly exceeding expectations.

JP Morgan revised its year-end target to $3,675 in a report on July 1. Considering there are five months remaining until the end of the year and the current price has broken through the $3,300 level, the likelihood of this scenario materializing is quite high.

Bearish Outlooks Are Less Convincing

Some institutions, like Barclays and Macquarie, expect the price to fall to $2,500 per ounce by year-end. This scenario implies a roughly 25% decline from current levels, but given the fundamental structural changes in the current situation, such a decline is unlikely.

Considerations from an Investment Perspective

Overall, the gold price in 2025 is likely to maintain its upward momentum. However, some minority opinions suggest possible corrections in the second half of the year, so proper risk management is essential when investing. It is advisable to consider strategies such as phased buying at current high prices and to strategically allocate a portion of the portfolio to gold as a safe asset.