The golden question: What lies ahead for gold in 2025?
As we step into 2025, with its unpredictable markets and simmering geopolitical tensions, one thing remains unshaken — gold. In a time when economic uncertainty is the new normal, gold’s allure seems stronger than ever.
“Ultimately, gold is always a safe haven,” James Wilson, CEO of Alchemy Resources tells Mining.com.au. In 2024, gold proved its resilience as a store of value after surpassing all records, briefly touching nearly US$2,780 ($4,401) per ounce in late October just before the US presidential election.
As of 9am AEST today (7 January), gold’s price stood at $4,236.62 per ounce. While the precious metals spot price has soared, production levels have not kept pace. Australia, ranked third behind China and Russia, produced 293 million tonnes of gold in 2023, but overall output remains constrained, as reported by the World Gold Council.
Wilson says gold cannot be replaced, it has a finite supply. “You can’t just print more when you run out like what happens with currencies, and it’s getting harder to mine — less deposits being found and old mines exhausting supply,” he says.
Despite the rising gold prices, as geopolitical tensions simmer, gold has found itself in an unexpected position, with the rise of digital currencies and the slow decline of traditional fiat systems.
As such, the golden question isn’t just about how much gold will be worth in 2025, but what its true value will mean in a rapidly changing world. Is this a fleeting surge — or the beginning of a new era for gold?
Explorers versus producers
While gold prices are hitting record highs, the fortunes of companies within the gold sector are not as consistent. As Mining.com.au has previously mentioned, the contrast between gold exploration companies and established gold producers has never been more stark.
The outlook for junior gold explorers remains relatively subdued. At the beginning of Q3 2024, several explorers, such as Great Boulder Resources (ASX:GBR), pointed out that while the gold price is flourishing, the market has not been willing to attribute value to explorers.
Managing Director Andrew Paterson, who won the inaugural Masters of Mining ‘Most Vocal Industry Supporter Award’, tells Mining.com.au that while gold miners are thriving as their business gains value with rising prices, “for explorers, it’s going to take a while longer before that effect kicks in”.
“We’re in an unusual situation where gold is at record highs and most other commodities are struggling, but the market is yet to attribute value to gold explorers.”
Accordingly, Pacgold (ASX:PGO) Managing Director Matthew Boyes shares a similar stance, telling Mining.com.au that the junior sector does not benefit from a higher gold price.
“It seems producers are obviously a different story,” Boyes says.
However, he adds that Pacgold’s Alice River asset is an “excellent project” and could potentially deliver a “major discovery over the next 12 months.”
Explorers face a unique challenge. While the price of gold continues to rise, investors are reluctant to place significant value on exploration-stage companies, despite their potential to make major discoveries.
This investor sentiment is often influenced by higher risks associated with exploration, such as the uncertainty of finding economically viable deposits and the long timelines required to bring a project into production.
On the other hand, established gold producers are enjoying significant boosts to their share prices. As the gold price rises, producers reap the rewards.
A prime example is Northern Star Resources (ASX:NST), which, during the September quarter of 2024, sold 394,000 ounces of gold at an all-in sustaining cost of $2,082 per ounce.
Northern Star, which has a market capitalisation of $18 billion, had also seen its share price increase nearly 50% in the past year. In January 2024, Northern Star’s share price was trading at about $12.80. As of 18 December 2024, the share price is at $15.67.
Speaking to Mining.com.au, Hamelin Gold (ASX:HMG) Managing Director Peter Bewick says that due to larger investors wanting diversity of production, producers are strengthening their resource bases and multiple production centres.
While gold’s role as a store of value has been well established, new forms of digital currency, such as bitcoin, are emerging as potential competitors.
The Reserve Bank of Australia (RBA) highlights that cryptocurrencies operate as digital tokens that enable direct peer-to-peer transactions via decentralised online systems.
Over time, activity in cryptocurrency markets have increased significantly. The RBA reports bitcoin increased from about US$30,000 in mid-2021 to almost US$70,000 toward the end of 2021, before falling back to US$35,000 in early 2022.
The landscape of safe haven investments is shifting, with many industry executives and analysts observing growing competition from different commodities and cryptocurrencies.
Bewick acknowledges this emerging competition, noting that cryptocurrencies are also being seen by some investors as a potential safe-haven asset.
However, he adds: “I don’t think there are real challenges to gold as a store of value and there are thousands of years of history that says gold will be here for a long time to come.”
The rapid growth of cryptocurrency, particularly bitcoin, has captured the attention of investors who see digital assets as an alternative to traditional safe-haven investments.
According to financial services provider Bankrate, this surge has fueled renewed interest in digital currencies as an alternative to more traditional assets like gold. We saw this when bitcoin reached an all-time high of over US$105,000, which was bolstered by the Federal Reserve’s interest rate cuts and the US presidential election.
Tempest Minerals (ASX:TEM) Managing Director Don Smith says he has noticed the popularity of cryptocurrency particularly towards the end of this year.
“Gold will always be the go to safe haven, though things like crypto are starting to return in popularity towards the end of ‘24,” he tells this news service.
The interest in cryptocurrencies has seen a growing amount of computing power used to solve the complex codes that many of these systems use to help protect them from being corrupted.
Despite the growing interest and technological advancements in the cryptocurrency space, scepticism remains about whether digital currencies can fully replace traditional forms of money or serve as reliable substitutes for gold.
James Gurry, Managing Director at Aureka (ASX:AKA), says the company’s investors are not “subscribers to the crypto craze”.
“They prefer the value and reassurance that physical gold offers, as well as in a well-run ASX-listed business with potential to grow,” Gurry says.
This ongoing tension between gold and newer assets like cryptocurrencies has significant implications for the future outlook of gold as a safe-haven investment.
As the market dynamics continue to evolve, many are wondering whether gold’s status will remain unchallenged or if digital assets will continue to carve out their own space in the investment world.
Much like the landscape of investing, predicting the gold price remains a challenging task, especially in these turbulent times. Bewick notes that the growing number of global conflicts and economic uncertainties is pushing investors to seek safe-haven assets.
“Global conflicts and general uncertainty fuel the search for safe havens for investors, and gold has traditionally been the safe place to ensure you don’t lose too much wealth if there are financial hiccups,” Bewick says.
Wilson is similarly optimistic, saying he is “bullish” on gold pushing higher this year. “All the key markets for supportive gold prices such as global inflation and geopolitical tensions remain so I’d certainly be looking for gold prices to remain around current levels,” he says.
Meanwhile, Gavin Wendt, founder of MineLife, believes the future of gold is looking bright. Wendt says over the past 25-years, the price of gold has seen an impressive 800% increase, and he sees no reason why this upward trend won’t continue.
“All of the same factors are still in play — i.e. escalating global debt, weaker fiat currencies, and central bank buying,” Wendt says. “All three of these factors are connected. The next price challenge for gold will be the US$3,000-per-ounce mark.”
Goldman Sachs shares a similar sentiment, forecasting that gold will continue its upward trajectory, driven in part by rising purchases from central banks in emerging markets. Lina Thomas, a research analyst at Goldman Sachs, says gold’s price is predicted to rise to US$3,000 per ounce by the end of 2025.
Meanwhile, other industry executives are not so bullish, and forecast gold’s spot price will remain stagnant given the US presidential election results and the ease of interest rates. For his part, Pacgold’s Boyes tells Mining.com.au he predicts gold’s price will hit $4,200 per ounce.
“But who knows, we are in a conflictive world,” he says.
While the relationship between interest rates and gold prices still holds, Thomas explains that central bank gold purchases have altered the dynamics since 2022, making future predictions more complex than ever before.
Ultimately, the future of gold remains a complex puzzle. Some industry executives are bullish on the precious metals’ price potential, while others are less certain as they point to the growing competition from digital currencies and the possibility of a shift in global financial dynamics.
For now, gold shines as a safe-haven investment, but whether this remains the case in 2025 is still an open question.
As such, the golden question still remains, is this a fleeting surge — or the beginning of a new era for gold?
Source: https://mining.com.au/