Bank of Taiwan predicts gold price rise in 2025
Following a 27% increase in gold prices last year, Yang Tian-li, manager of the Bank of Taiwan’s precious metals department, forecasts that the upward momentum for gold will continue this year.
Key factors influencing gold prices this year, according to Yang, include the US economy and global safe-haven demand. He anticipates that gold prices will be impacted by a strong US dollar, a robust US stock market, high interest rates, and ongoing geopolitical tensions in the second term of US President Donald Trump, per CNA.
Yang predicts a “volatile upward trend with limited downside” for gold. Prices could reach US$2,800 (NT$92,313) per ounce (28.35 g) and possibly surpass the US$3,000 mark.
After Trump's election, Yang observed a period of consolidation in gold prices, where the US dollar remained strong, and US bond yields remained elevated.
Despite these relatively unfavorable conditions for gold, Yang noted that gold displayed resilience, supported by robust demand in the physical market, rather than from futures or exchange-traded funds.
Yang explained that much of the demand for physical gold is driven by risk aversion. In November, coinciding with the US presidential election, global central banks net-purchased 53 metric tons of gold, the largest single-month purchase in a year.
The purchases reflect precautionary actions taken by central banks in response to uncertainties surrounding the administration's policies. Yang anticipates that the trend of diversifying central bank reserves will continue, which will further support gold prices.
In addition to global economic factors, Yang noted Trump’s proposals such as imposing additional tariffs, anti-immigration policies, and ambitions to control strategic areas like the Panama Canal and Greenland. While these policies have not yet materialized, Yang suggests their implementation could lead to inflation and increased geopolitical tensions, thereby bolstering gold's safe-haven appeal.
Another key factor is the Trump administration's strong dollar strategy. Yang warned that rising interest rates could exacerbate US debt issues, potentially prompting investors to shift their assets from US bonds to gold.
Yang emphasized the importance of diversifying investment portfolios with gold. Investors can tailor their allocations to their risk profiles—aggressive, moderate, or conservative.
During periods of volatility and consolidation in the global gold market, Yang advises investors to use a dollar-cost averaging strategy to steadily invest in gold savings plans, gold passbooks, physical gold bars, or coins.
While gold is a dependable store of value, short-term investors should be mindful of the potential risks from market fluctuations, Yang reminded.
Source: https://www.taiwannews.com.tw/