Gold Continues Upward Momentum in 2025

Gold prices have been on a remarkable rise in 2025, gaining 11 percent year-to-date (YTD) and outperforming equities and Bitcoin. Ventura Securities predicts that gold could reach USD 3,000 per ounce, with a possibility of surpassing USD 3,080 in Q1 2025. In contrast, the Nifty index has fallen over 3 percent, while Bitcoin has posted modest gains of around 3 percent this year.

At present, the gold price stands at USD 2,933 per ounce, while in India, the price has reached ₹86,810 per 10 grams. The 22-karat gold price per gram is ₹7,882, and gold recently hit a record high of USD 2,942.70 per ounce on February 11.

Factors Driving Gold’s Rally

According to Ventura Securities, multiple factors are driving gold’s upward momentum, including:

• Safe-haven demand: Investors are turning to gold as a hedge against global uncertainties.
• Geopolitical tensions: Ongoing conflicts and economic instability are pushing investors toward safe assets.
• Inflation concerns: Rising inflation is increasing demand for gold as a store of value.
• Central bank policies: Large-scale gold purchases by central banks are supporting higher prices.

Central Banks’ Strong Demand

One of the key drivers of gold’s rally is strong central bank demand. In 2024, central banks purchased 1,045 tons of gold, marking the third consecutive year of buying over 1,000 tons. Over the past three years, central banks have accumulated more gold than in the six years before 2022.

US Trade Tariffs and Market Speculation

The US has imposed new trade tariffs, increasing economic uncertainty and boosting gold’s appeal. Speculation about potential tariffs on gold imports has led to a surge in physical gold buying across London, Switzerland, and Asia, as investors anticipate possible new levies in the US.

Challenges to Gold’s Uptrend

Despite the bullish outlook, certain challenges could slow gold’s momentum:

• Strong US Treasury yields: Higher bond yields reduce the attractiveness of non-yielding assets like gold.
• Strength of the US dollar: A strong dollar can put downward pressure on gold prices.
• Federal Reserve’s interest rate policy: Fed Chair Jerome Powell has indicated that further rate cuts are unlikely in the short term.

Federal Reserve’s Impact on Gold Prices

The Federal Reserve cut interest rates by 100 basis points in 2024, bringing rates down from 5.50 percent to 4.50 percent. However, with inflation remaining elevated at 3.0 percent in January 2025, the Fed may keep monetary policy restrictive to ensure inflation moves toward its 2 percent target.

If the US labor market weakens or inflation declines faster than expected, the Fed may reconsider its stance. However, if inflation remains high, the US dollar could strengthen further, potentially limiting gold’s upside.

Outlook for Gold Prices in 2025

Despite these challenges, Ventura Securities remains optimistic about gold’s prospects. With continued safe-haven demand, central bank purchases, and economic uncertainties, gold is expected to maintain its bullish trend. If gold breaches USD 3,080 per ounce, it could enter a new phase of record highs in the coming months.

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