Decode foreign exchange platform: gold price growth slows down in 2025, reaching $3,000 in mid-2026

A major investment bank says gold's record-breaking rally will slow in 2025.Decode Forex Platform- Gold will take longer to reach $3,000 an ounce, but steady central bank demand remains a key long-term driver.

Goldman Sachs announced on Sunday (January 5) that it no longer expects gold prices to reach $3,000 an ounce by the end of 2025, with a shallower path for the Federal Reserve to cut interest rates pushing that forecast to mid-2026.

Goldman Sachs analysts, including Lina Thomas and Daan Struyven, wrote in their latest report that a slowdown in monetary easing in 2025 could dampen demand for gold ETFs. They now expect spot gold prices to peak at $2,910 an ounce by the fourth quarter of 2025. Weaker-than-expected ETF flows in December 2024, driven by easing uncertainty following the U.S. election, also led to a lower starting point for gold prices heading into the new year, the analysts added.

"The opposite forces, a decline in speculative demand and a structural increase in central bank buying, have effectively offset each other, keeping gold prices range-bound over the past few months," the analysts wrote. But they added that central bank demand would remain a key driver of gold prices over the longer term. "Looking ahead, we expect average monthly purchases to reach 38 tonnes by mid-2026."

Goldman economists now expect a rate cut of 75 basis points in 2025, down from their previous forecast of 100 basis points. The updated forecast remains more dovish than current market expectations as the bank sees underlying inflation trending lower.

Analysts also expressed doubts that the policies of the incoming Trump administration would necessarily lead to higher interest rates.

As recently as November 18, 2024, commodities analysts at Goldman Sachs were still insisting that gold prices would reach $3,000 an ounce by the end of 2025.

Even after Trump's election victory and a Republican victory in Congress triggered a wave of selling and profit-taking in the gold market, Goldman Sachs said the factors driving gold prices to new highs have not disappeared.

"The structural driver of this forecast is increased demand from central banks, while inflows into ETFs will provide a cyclical boost as the Fed cuts interest rates," analysts said in a note at the time.

Analysts say they expect central bank demand to remain strong for the foreseeable future as countries continue to diversify their official reserves away from the dollar.

Goldman Sachs also pointed out that the growing debt of the US government could prompt more central banks to increase their gold holdings.

While Mr. Trump's election victory and proposed "America First" policies have pushed up Treasury yields and the dollar, creating significant headwinds for gold, Goldman Sachs said they could also support prices in 2025.

"An unprecedented escalation of trade tensions could revive speculative positions in gold," analysts said.

Daily chart of spot gold

Beijing time on January 7th 11:32 spot gold reported 2639.26 US dollars/ounce