Gold prices have been smashing records recently and showing no signs of slowing down. As of the latest trading session, spot gold held firm at a record high of $2,508.14 per ounce, while US gold futures climbed to an unprecedented $2,540.80 per ounce during Monday’s Asian trading hours.
This impressive rally comes as no surprise to many market analysts, who see the precious metal as poised for even greater heights in the coming months.
With a perfect storm of geopolitical tensions, economic uncertainty, and central bank policies, I believe that gold could surge past $3,000 per ounce in the second quarter of 2025.
Gold has long been considered a safe haven in times of uncertainty, and with the global landscape as volatile as ever, it’s no wonder that investors are flocking to the yellow metal.
The world is currently grappling with a myriad of challenges, from geopolitical conflicts to economic instability, and gold is thriving as a result.
One of the primary drivers of gold’s recent surge is the growing uncertainty surrounding global politics.
In 2024, the world is experiencing one of the busiest election years on record, with more than 60 countries holding significant national elections.
This unprecedented level of political activity spans across various regions, involving both executive and legislative elections, including the highly anticipated US presidential election in November.
Political uncertainty has always been a boon for the king of metals, and with the stakes higher than ever, investors are seeking refuge in it.
In addition to the electoral chaos, the ongoing conflict in Ukraine continues to weigh heavily on global markets.
Ukraine’s recent incursion back into Russia has reignited tensions in the region, and the possibility of further escalation is keeping investors on edge. Gold, as a traditional store of value during times of conflict, is benefiting from this heightened anxiety.
Meanwhile, tensions in the Middle East are also contributing to the surge in gold prices. The region has long been a hotbed of geopolitical strife, and recent developments have only added fuel to the fire. As uncertainty in the Middle East grows, so too does demand for the precious metal.
Central banks and rate cuts
While geopolitical tensions are certainly playing a significant role in gold’s ascent, monetary policy is also a crucial factor.
Investors are increasingly betting on the likelihood of a Federal Reserve rate cut in September, following signals from the central bank’s July meeting.
This dovish shift in monetary policy has bolstered confidence that the Fed is prepared to ease financial conditions, which historically supports higher gold prices.
This week’s Jackson Hole economic symposium, an annual gathering of global central bankers, could provide further clues about the Fed’s intentions.
Should the Fed signal a more accommodative stance, as we expect, it would likely give another boost to gold prices. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors.
The possibility of a rate cut comes at a time when inflationary pressures have moderated, giving the Fed more flexibility to focus on supporting economic growth.
However, even with inflation under control, the spectre of a global economic slowdown looms large, driving demand for safe-haven assets like gold.
Given the current landscape, many market watchers believe that gold’s recent rally is just the beginning. If the momentum continues, I believe the precious metal could break through the $3,000 per ounce mark by the second quarter of 2025.
As we approach towards the end of Q3, the metal’s march towards this landmark seems not only plausible but increasingly likely.
Nigel Green is deVere CEO and Founder
Also published on Medium.