In order to focus on what will be important in determining gold prices in 2025, we first need to lay out three important points that help frame New York-based CPM Group’s outlook for gold prices this year.
First, the single most important set of factors in setting the price levels and directions of gold prices are the levels and trends in investment demand for physical gold. That demand in turn is determined by a myriad of economic, financial, and political concerns and uncertainties that cause investors to think they need to own more or less gold.
Investment demand drives prices. Prices drive mine production, secondary recovery from scrap, and fabrication demand.
Second, CPM Group issued a long-term gold buy recommendation in releasing its Gold Survey in November 2000. We laid out the case that there was about to be an upward shift in the investment demand curve: More investors and more types of investors in more parts of the world would want to buy more gold for a longer period of time than ever before.
The result of this gold renaissance would be that gold prices, then around $260 per oz., would rise far beyond the 1980 record $850 and stay there for decades.
Prior to 1980, hostile economic and political trends would cause investors to buy more gold for a year or two. After such a period, conditions would improve and investors would buy less gold. Gold prices would subside until the next one or two-year set of crises would start the cycle again.
In 2000, CPM stated that the next cycle would see investors buying more gold for decades, not years.
Finally, there have been major shifts in the international and national political contexts around the world. One of the more significant ones is the imminent return of Donald Trump as president of the United States.
His return to power this month could dramatically alter the economic and political fortunes and landscape. It is not clear what his presidency will mean and do to the world, given the internal inconsistencies of his stated plans, but they are likely to be negative for world growth. It is too early to tell.
With these underlying realities in mind, the outlook for gold in 2025 suggests further price increases.
Gold prices have risen sharply since the middle of 2019. In 2024, gold averaged $2,370 per oz. as of Nov. 26, 21% higher than the 2023 average of $1,952.
CPM expects that gold prices might rise further in December, yielding an approximately 23% rise in the annual average gold price for all of 2024. We’re now projecting another 13% increase to an average price around $2,730 per oz. in 2025.
Prices may rise in the first quarter, and calm down a bit in the second quarter of this year, before beginning to rise again, depending on how the economic and political environments evolve.
CPM has been projecting a recession at some point, perhaps most likely in 2025 or 2026. If the US government slashes its spending and pursues hostile postures toward any number of countries, a recession could arrive sooner and be more severe.
Trump often considers imposing tariffs. This raises the spectre of a deeper recession sooner.
Republican president Herbert Hoover and Congress sought to combat the Great Depression by enacting the Tariff Act of 1930, known as the Smoot–Hawley Act.
It raised tariffs on more than 20,000 imported goods mostly by 40% to 60%. Smoot-Hawley and the retaliatory tariffs in other nations caused a 67% decline in US trade, imports and exports, deepening and prolonging the severity of the Great Depression.
Regarding gold market fundamentals, CPM projects around a 1.5% increase in global mine production in 2025 to around 88.6 million ounces. This would follow an increase of around 0.5% in 2024.
Mining share prices are likely to continue to lag gold metal prices, reflecting long-term shifts in investor attitudes and distinctions between gold bullion and mining equities.
Secondary supply, or recycled gold, in 2025 is projected to rise around 10% to about 40.9 million oz. due to the higher gold prices and anticipated worsening consumer economics in many parts of the world.
Total supply of newly refined gold is projected to be around 136.9 million oz., adding in around 7.4 million oz. from transitional economy exports. This would be up around 3.8% in 2025 from 2024.
Central banks are projected to continue to be net buyers of around 8 million oz. in 2025, roughly unchanged to a bit lower than in 2024. Monetary authorities tend to be more price sensitive than private investors.
Central banks pulled back from buying as much gold as they had been buying since gold prices broke above $2,200 at the end of last March. This hesitancy is expected to continue in 2025, since prices are expected to stay strong and rise further.
One big risk is that a politically and economically collapsing Russia might sell several million ounces of its 75 million oz. of monetary reserves.
Investors bought 24 to 26 million oz. of gold on a net basis annually from 2021 through 2023. They are estimated to have bought around 32 million oz. in 2024. CPM is projecting investors will buy around 44 million oz. in 2025 as political and economic conditions elevate investor concerns.
A range of economic and political issues seem likely to keep investors interested in adding gold to their portfolios. That should keep gold prices high and most likely drive them to new record prices over the course of 2025.
Jeffrey Christian is an analyst and adviser in the precious metals and commodities markets. He has been active in the industry since the 1970s and has expertise in a range of commodity markets, including precious metals, energy, base metals and agriculture. In 1986, he founded the CPM Group, which was spun off from Goldman Sachs & Co. and its trading arm, J. Aron & Co.
