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Analysts at UBS forecast sustained upward momentum in gold prices throughout 2025, driven by a combination of declining global interest rates and persistent geopolitical risks. These factors reinforce gold’s status as a reliable safe-haven asset while aligning with favorable macroeconomic trends.
Key Drivers for Gold’s Rally
- Lower Interest Rates
- Central banks are expected to adopt more dovish monetary policies, addressing subdued inflation and slowing economic growth.
- A low-interest-rate environment reduces the appeal of cash and bonds, enhancing the attractiveness of gold, which offers stability despite its lack of yield.
- UBS highlights that falling yields across asset classes will likely channel increased investment flows into gold, thereby driving its value higher.
- Geopolitical Risks
- Heightened tensions in regions like Eastern Europe and the Middle East bolster gold’s appeal as a hedge against uncertainty.
- Concerns over U.S. government debt and fiscal deficits in major economies add to the demand for gold as a store of value.
- Ongoing risks in global trade dynamics further contribute to the metal’s allure during market volatility.
Structural Trends Supporting Medium-to-Long-Term Growth
UBS also underscores several structural factors underpinning gold’s medium- to long-term prospects:
- Investment in Transition Metals: Increased renewable energy projects are creating overlapping demand dynamics, indirectly benefiting gold.
- Deglobalization and Demographic Shifts: These macroeconomic trends are reshaping investment landscapes, favoring stable assets like gold.
Outlook for Gold in 2025
Gold’s dual appeal as both a safe haven and an attractive investment during low-yield periods positions it for continued strength in 2025. Supported by dovish monetary policies, geopolitical tensions, and emerging structural trends, the precious metal is expected to remain a cornerstone of diversified portfolios.
