Investing.com – Gold costs might tick as much as one other file excessive in 2025 as buyers hunt for protected havens in response to probably “bouts of fairness market volatility”, in accordance with analysts at UBS.
The yellow steel surged by 27% in 2024, touching an all-time excessive of $2,788 per ounce in October and setting a file annual common worth of $2,389 per ounce.
Regardless of a sell-off following a rush into riskier property following Trump’s US election victory, it was nonetheless gold’s strongest yearly acquire since 2020.
In be aware to shoppers on Tuesday, the UBS analysts predicted {that a} not too long ago stronger US greenback and elevated US authorities bond yields might weigh on gold within the first half of 2025. The next greenback could make bullion costlier for international patrons, whereas a soar in yields might dent the attraction of non-yielding gold.
The dollar has strengthened and Treasury yields have marched greater in current days as buyers dial again expectations for Federal Reserve rate of interest cuts this 12 months. Worries have grown that strong financial information, together with President-elect Donald Trump’s sweeping tariff plans, might reignite nagging worth pressures, giving the Fed much less room to slash borrowing prices.
Nonetheless, demand for gold as a portfolio “diversifier” to assist hedge towards inflation ought to “greater than offset” headwinds from the greenback and yields, the UBS analysts argued.
Durations of volatility in shares are tipped to grow to be extra frequent, notably given “excessive sector and geographical focus throughout portfolios” in addition to lofty fairness valuations, they added.
“These uncertainties level to a different 12 months of sturdy official sector gold purchases alongside diversification demand from much less rate-sensitive components of the funding neighborhood,” the analysts wrote, noting that they’re focusing on a worth of $2,850 per ounce for gold by the top of the 12 months.
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