5 Reasons for Higher Gold Prices in 2025

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There are LOTS of reasons for higher gold prices in 2025. 2024 was a breakout year for gold, and 2025 will most likely see the price of gold going even higher – much higher – continuing its run of notching one new record high after another. This past year saw gold surge from around $2,000 an ounce at the start of the year to over $2,600 an ounce at year’s end. So, is the bull market in gold over now? – Not likely. Rather than nearing the end of its bull run, gold (and silver) may be just getting started.

To open my 2025 commentary on the precious metals market here at True Gold Republic, I’ve scoured the globe for the thoughts, observations, insights, and 2025 forecasts of nearly every gold expert I could find (reading myself half-blind in the process, I might add). In this article, I’ll share with you what I think are the most keenly insightful comments on how gold and silver are likely to perform in the coming year.

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I’ll be focusing a spotlight on what the key drivers of higher gold and silver prices are most likely to be. So, here we go with five reasons we’ll probably be seeing much higher gold prices in 2025.

Reason #1 - Central Banks Continue Buying Gold at Record Paces

One of the major drivers of higher gold prices over the past several years has been feverish gold buying by the central banks of nations all across the globe. That even includes the Federal Reserve Bank of the United States, which has long officially derided gold as a key financial asset. The trend of central banks rapidly stocking up on gold shows no sign of ending.

Important new developments include both Russia and China expanding their voracious appetite for acquiring precious metals to include larger purchases of silver. Russia formally announced adding silver to its list of strategic financial assets, and China is busy scooping up tons of unrefined silver ore from miners in Central and South America.

One clue to how important China believes piling up a massive gold hoard is - the fact that it’s gotten a lot sneakier about its gold purchases. As far as official reports of gold purchases go, those indicate – erroneously – that China took a full six months off from buying gold in 2024. But no one who’s anyone in the precious metals market believes that. Those in the know – and who were smart enough to check shipping manifests on shipments from London to Shanghai and Beijing – found China actually buying up 50+ tonnes of gold in months where it “officially” reported not buying any gold at all. Just in the brief period since the US froze Russian assets in 2022, the People’s Bank of China has, by even very conservative estimates, acquired more than 1,000 tonnes of gold. The actual number may well be two or three times higher than that.

Here are two charts to look at that show the explosions in gold buying by Russia and China. The #1 and #2 producers of gold have both also become massive importers of gold. The first graphic below shows the growth in Russian gold reserves through 2014. The second shows the expansion in gold importing by China, also just through 2014. Updated graphics would show those steep upward trends continuing right up to the present.

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Even the central banks of much smaller nations, with much smaller financial purses, such as Poland, the Czech Republic, and Hungary, have joined in the current central bank gold fever. Poland was recorded as the largest official buyer of gold for the second quarter of 2024.

It’s clear that China, Russia, and the US, along with many other nations, view gold as a critical financial asset for the future global economy. These gold purchases by central banks aren’t just little side bets, small hedges. They’re major financial commitments to stockpiling gold (and silver).

Central bank buying should continue pushing precious metals prices higher.

Reason #2 - Major Retail Banks Start Betting on Gold

After consistently giving low, conservative estimates of gold prices throughout most of 2024, analysts at Goldman Sachs “bravely” stuck their necks out late in the year – with gold already cresting the $2,500 level – and said it might hit $2,600. Gee, no kidding? In fact, gold soared to just short of $2,800 before settling near the $2,650 level to close out 2024.

The analysts at Goldman Sachs appear to have become significantly more bullish on gold for 2025. They’re projecting gold potentially hitting the $3,000 per ounce price level this year. If that estimate is as below-actual-performance as most of their 2024 forecasts were, I’d say that $3,500 (or a lot higher) is perhaps a more probable 2025 price target.

A survey of several banks and refiners conducted by the Financial Times came up with an average 2025 price forecast of $2,795 per ounce – right around gold’s 2024 high. Personally, since gold has already gone there, I’m betting on a substantially higher 2025 high for gold. The various reasons given for expecting higher gold prices include continued interest rate cuts by the Federal Reserve, continuing geopolitical tension in the Middle East and in the Russia-Ukraine conflict, and – as already noted here – continued substantial gold buying by central banks.

Even one of the bullion banks that has previously been fined nearly $1 billion for market manipulation designed to suppress gold and silver prices appears to be becoming a fan of the yellow metal. When the US froze Russian assets in 2022, JPMorgan Chase moved to take over as a joint vault custodian, along with HSBC bank, of the largest gold ETF – SPDR Gold Shares (NYSE Arca: GLD). It followed up that move by transferring, over a period of months, roughly 90% of the fund’s gold bars into its own vaults. That is a lot of physical gold to move, and not an inexpensive endeavor. The only logical reason that I can see for JPMorgan going to that much trouble and expense is if it believes (A), that the value of gold is likely to substantially increase, and (B), that gold is going to become a significantly more important financial asset to hold.

While JPMorgan Chase bank was officially no friend of gold for many years prior to this, I’ve noted in previous articles that its founder, J.P. Morgan is the author of the definitive quote on money – “Gold is money - everything else is credit.”

The precious metals market experts at moneymetals.com observe that many retail bank analysts’ gold price projections for the year assume a soft landing for the US economy. They go on to warn – quite correctly, I think - that if no such soft landing occurs – if, instead, there’s a major disruption to the US economy – then that will logically spike gold prices much higher. The very pointed phrasing used by Moneymetals’ Mike Maharrey was, “…the price of gold would likely blow through the roof”.

Reason #3 - A Gold Supply Problem Arising in 2025

At the same time that the global demand for gold is steadily increasing, there’s a looming problem in the future available supply of gold.

At an International Metals Symposium held in London in December, CRU Consulting gold analyst, Oliver Blagden, stated that worldwide gold production will peak in 2025…and then begin to decline. Blagden warned that, moving beyond 2025, both gold mining production and ore grades will fall, and gold reserves will begin being depleted. Additionally, older mines will start closing as they become played out.

Adding to this looming gold supply problem is the fact that, despite increasing profitability for the gold mining sector, there is a paucity of new gold mining projects on the horizon. China, the world’s largest gold producer is already seeing modest reserves relative to production, and ore quality in another major gold producer, Russia, is already in decline.

In conclusion, Blagden somberly noted that gold production could fall off by nearly 20% by 2030. That would constitute a massive production drop for a period of just five years.

Another factor that could constrict the available gold and silver supply is nationalization of precious metals mining. The move toward nationalizing gold mines is already underway in several African countries, and experts have been sounding the alarm to investors to avoid silver mining companies in Mexico, as they, too, are likely to be nationalized.

Increasing demand…constricting supply. That’s a fundamental equation for higher gold and silver prices.

Reason #4 – What About Trump and the US Economy?

All the world’s financial eyes will be on the United States as President Trump takes office. Trump’s first term as President was a resounding success in relation to the economy – lower unemployment, higher wages, and expanded oil and gas production making the US energy independent and a net exporter of energy. But whether he can now successfully reverse the widespread economic catastrophe precipitated by President Biden’s policies remains a question that’s very much still up in the air.

Trump assumes power accompanied by Elon Musk and Vivek Ramaswamy, who will be heading up the newly created “Department of Government Efficiency” (DOGE), with the stated aim of slashing federal spending. Musk and Ramaswamy are both very intelligent men, and I don’t doubt their sincere determination. But to say that they face an uphill battle is possibly the understatement of the year.

Trying to significantly cut back massive entrenched government bureaucracies is rather like undertaking the task of pushing Mount Everest a few hundred miles south. The efforts of Musk and Ramaswamy will be further complicated by the simple fact that it’s Congress, not the Executive branch of the US government, that has ultimate control of government spending. And there’s no doubt that Democrats in Congress will be fighting them tooth and nail every step of the way. Even in instances where Democrats might agree with the DOGE on the wisdom of making some cuts, they’ll still fiercely oppose them purely for political reasons - because they want Trump to fail much more than they want the US financial house to be put in better order. The Democrats have clearly shown that they’re perfectly willing to let the US economy go to hell in a handcart as long as Trump goes down with it.

And there are other massive problems that the US economy faces. Even if the DOGE can succeed in making some substantial reductions in future government spending, that won’t erase the existing federal debt of more than $36 trillion. The interest payments alone on that debt threaten to soon be the largest annual federal expense.

A major problem that the Federal Reserve Bank faces is the ongoing decline in foreign buyers for US Treasuries. Here’s a picture of just the drop-off in appetite for buying US debt by China alone:

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(And you can rest assured that Russia certainly won’t be buying any US government securities.)

The Fed is caught between a rock and hard place – 

• On the one hand, in order to attract more buyers of US debt securities, it will have to raise the yields it offers on Treasuries
• But on the other hand, raising interest rates threatens to crash the US stock market, the housing market, the whole US economy, and possibly even the global economy (What’s the phrase? – “When the US economy sneezes, the whole world catches a cold”)

The long and short of things is that the US economy remains in a very precarious position, threatened on all sides, by inflation, interest rates, debt, and just the general economic uncertainty that persists all across the globe.

Even if Trump’s economic policies can succeed in strengthening the US dollar, gold is still likely to continue increasing in value versus other major currencies. And over the longer term, the outlook for the US dollar is just about as dismal as the outlook for the yen, the euro, and the pound – very dismal indeed.

Reason #5 - A Fragile Global Economy and a Collapsing Fiat Currency System

In his 2025 outlook for gold, renowned economist and precious metals market expert Alasdair Macleod points out that all of the world’s major fiat currencies have been steadily declining in value versus gold ever since the gold standard was abandoned in 1971 – and that decline has sharply accelerated since the turn of the century.

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Just in case that graphic isn’t graphic enough for you…what it shows is that, over the past roughly 50 years, virtually all of the fiat currencies in the world have seen a decline in their purchasing power of more than 90%. It remains a basic historical truth that no fiat currency has ever survived in the long run. Eventually, fiat currencies are inevitably debased and ultimately destroyed.

Macleod believes that the frenzied gold buying by central banks worldwide is fueled by the knowledge that the current global fiat currency system as a whole is on the verge of collapse. Therefore, countries are moving strongly to convert more of their financial assets into real money (i.e., gold and silver). He sums up his current analysis and projections for the future as follows: “The wise will follow the precautionary reserve policies of many central banks by reducing their exposure to credit” – (“credit” here refers to fiat currency) – “and increasing their holdings of international, legal money, which is gold. 2024 saw the dollar decline measured in gold by about one quarter of its value…2025 promises a further acceleration.”

5 Reasons for Higher Gold Prices in 2025 - Conclusion

From whatever vantage point you care to take, the market for gold and silver prices in 2025 (and beyond) looks firmly bullish. Demand is rapidly increasing, while annual mining production continues to fall short. (For example, the Silver Institute reports silver supply for 2024, at just over 1,000 million ounces, falling way short of demand at 1,219 million ounces. New industrial uses for gold are combining with central bank and investor demand to devour every ounce as soon as it’s pulled out of the ground.) Inflation, geopolitical uneasiness, deteriorating fiat currencies…all portend higher prices. 

One of the most interesting gold price forecasts that I came across, courtesy of goldbroker.com, made the following observation: “(In) almost 90% of the years in which the price of gold rises by more than +25%” – as it did in 2024 – “are followed by another year of increases…an annual increase of more than +25% in the price of gold is often a sign of momentum, leading to a more sustainable uptrend for the following year. The average rise over the following year is +38%...”.

Here's the graphic goldbroker.com used to document gold’s past performance:

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That analysis further pointed out that gold is at the top of a long-term trading channel. Speaking purely from a technical analysis viewpoint, a breakout above that price channel would logically signal a surge to substantially higher prices.

Well, let’s see…a 38% increase in the price of gold from current levels would put the price up around the $3,650 level – roughly $1,000 an ounce higher than where it is now. That sounds good for a start. And let’s not forget that several savvy major gold investors are looking for gold prices in the long-term to climb to somewhere between $20,000 to $50,000 an ounce.

Even if some bizarre set of circumstances should combine to put downside pressure on gold prices in 2025, I think there’s a good chance that little sister, silver, may ride to the rescue. The current supply and demand fundamentals for silver are extremely strong and, therefore, very likely to help propel the precious metals market as a whole to higher prices. Demand for silver is sharply increasing in several sectors of use, from industrial demand to investor demand, at the same time that annual mining production continues to fall well short of projected needs. Relatively conservative projections for silver prices in 2025 see that shiny metal rising to at least the $38-$40 per ounce level. (I’m still looking for it to take out it’s $50 an ounce all-time high.)

I’ll leave you with this interesting observation someone made to me about how ridiculously undervalued gold is: If you added up the value of all of the gold that’s ever been mined, calculated at today’s price around $2,650 per ounce, the total dollar value would just about equal the current market capitalization of Microsoft (MSFT). The value of all the gold ever produced in the world only being about as much as the value of one single big tech company? Think about how utterly ridiculous that idea is the next time someone suggests that the current gold price might be too high. The truth is that, at current price levels, gold and silver are both still hugely undervalued and relatively dirt cheap – which is what has many precious metals market experts pointing to them as “a once-in-a-lifetime investment opportunity”.

• J.B. Maverick

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Sources:

https://www.moneymetals.com/news/2025/01/02/wall-street-banks-expect-the-gold-rally-to-continue-003727

https://www.ft.com/content/9fa96c1d-03f2-4d25-9644-b29ae19407aa

https://www.mining.com/video-gold-mining-faces-a-cliff-after-2025-cru-analyst-predicts/

https://goldbroker.com/news/how-will-gold-perform-forecast-2025-3472

https://alasdairmacleod.substack.com/p/the-outlook-for-2025

https://www.conservativewoman.co.uk/bet-your-bottom-dollar-on-gold/

https://silverinstitute.org/silver-supply-demand/

https://www.gold.org/goldhub/data/gold-demand-by-country

https://www.iifl.com/blogs/gold-loan/why-is-gold-price-rising

https://smaulgld.com/gold-supply-and-demand/

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