Dec 18, 2024 (MENAFN via COMTEX) --
(MENAFN - Yolo Wire) Analysts at Swiss banking giant UBS (NYSE: $UBS) expect the current rally in %Gold bullion to continue throughout 2025.
Gold is currently trading at $2,657.80 U.S. per ounce, having risen 28% since the start of the year.
The price of gold has traded sideways over the past month, constrained by the strength of the U.S. dollar, rising U.S. Treasury yields, and investors appetite for stocks.
However, UBS analysts see several catalysts forming on the horizon for gold and expect the precious metal’s price to continue rising next year.
Specifically, UBS anticipates that central banks’ accumulation of gold will continue throughout 2025 as part of their diversification strategies.
Data from the International Monetary Fund (IMF) shows central banks’ net gold purchases in October were the highest monthly level this year.
UBS has revised its forecast for official sector gold purchases to 982 metric tons for 2024, up from a previous estimate of 900 metric tons.
While UBS’ latest figure is below the levels of central bank purchases over the past two years, it represents a substantial increase compared to the post-2011 average of 500 metric tons.
Investor demand for gold as a portfolio hedge is also likely to rise with Donald Trump returning to the White House, says UBS.
President-elect Donald Trump remains a wild card and uncertainties persist regarding his fiscal, trade, and geopolitical agendas.
Coupled with ongoing conflicts in Ukraine and the Middle East, UBS believes these factors will drive increased demand for safe-haven assets such as gold.
UBS expects to see increased capital allocations to gold exchange-traded funds (ETFs) in coming months.
Lower interest rates are also expected to bolster gold prices in 2025. The U.S. Federal Reserve is widely expected to cut interest rates a further 25-basis points today (Dec. 18).
A weaker U.S. dollar, driven by lower interest rates and concerns over U.S. debt levels, is likely to fuel gold demand by making it more affordable for non-dollar investors, says UBS.
UBS forecasts that gold’s price will reach $2,900 U.S. an ounce by the end of 2025.
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