Gold prices have soared to record highs, driven by persistent global economic uncertainty, fluctuating trade policies under U.S. President Donald Trump, and expectations of monetary policy easing by the Federal Reserve.
Investment bank UBS has revised its forecast for gold prices, predicting a rise to $3,200 (€2,950) per ounce by the end of 2025, citing strong demand from investors and central banks.
Gold Breaks Record Highs, Approaching $3,000 (€2,770) Milestone
Gold prices have been on a relentless upward trajectory, with spot gold reaching $2,979.76 (€2,750) per ounce as of March 13, marking the twelfth record high this year. U.S. gold futures settled at $2,991.30 (€2,760) per ounce, edging closer to the significant $3,000 (€2,770) mark. So far in 2025, gold prices have risen by nearly 14%, following a 27% gain in 2024.
“Gold is in a secular bull market. We forecast prices to trade between $3,000-$3,200 (€2,770-€2,950) this year,” said Alex Ebkarian, Chief Operating Officer at Allegiance Gold.
Tariff Uncertainty Fuels Demand for Safe-Haven Assets
One of the primary drivers of this price rally has been ongoing uncertainty surrounding U.S. trade policy. President Trump’s shifting stance on tariffs has unsettled markets, pushing investors towards gold as a hedge against economic volatility.
U.S. Commerce Secretary Howard Lutnick recently stated that a potential recession would be “worth it” to implement Trump’s economic policies, further fuelling market uncertainty.
John Ciampaglia, CEO of Sprott Asset Management, highlighted that “the potential impact of tariff and trade threats are impossible to model,” forcing the Federal Reserve to rely on economic data before making policy adjustments.
Federal Reserve Policy Outlook Remains a Key Factor
The Federal Reserve’s monetary policy stance remains a crucial element in gold’s price movements.
The central bank has cut interest rates by 100 basis points since September 2024 but paused its easing cycle in January. Traders are now anticipating that policymakers will resume cutting borrowing costs in June, potentially boosting demand for gold further.
Recent data from the U.S. Labor Department showed that producer prices remained unchanged in February, while consumer prices rose 0.2%, reinforcing expectations that the Fed will adopt a cautious approach to future rate cuts.
Strong ETF and Central Bank Demand Support Price Growth
Investment in gold-backed exchange-traded funds (ETFs) has been another major driver of rising prices. Standard Chartered analyst Suki Cooper noted that “strong ETF demand and continued central bank buying, combined with geopolitical uncertainty and tariff changes, have sustained appetite for gold.”
SPDR Gold Trust, the world’s largest gold-backed ETF, reported that its holdings had climbed to 907.82 metric tons by February 25, the highest level since August 2023.
Meanwhile, central banks, particularly in China, continue to accumulate gold reserves. Data from the People’s Bank of China revealed that the country extended its gold purchases for a fourth consecutive month in February, reinforcing a broader trend of de-dollarisation among major economies.
Outlook for 2025
Beyond UBS’s forecast of $3,200 (€2,950) per ounce, other financial institutions expect even higher price targets. Macquarie Group anticipates gold reaching $3,500 (€3,230) per ounce in the third quarter of 2025, while Jeffrey Gundlach of DoubleLine Capital believes the metal could climb to $4,000 (€3,690) per ounce.
As geopolitical and economic uncertainty persists, demand for gold is likely to remain strong. With the Federal Reserve’s next policy meeting on the horizon and ongoing trade tensions, analysts suggest that the precious metal’s rally is far from over.
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