Investing.com -- Gold prices are expected to continue their upward momentum in 2025, as per analysts at UBS, driven by two key factors: declining interest rates and persistent geopolitical risks.
These elements are set to reinforce gold's status as a safe-haven asset while also benefiting from broader economic conditions anticipated in the coming year.
The first major factor contributing to the rally in gold prices is the prospect of lower interest rates.
UBS forecasts that central banks globally will adopt a more dovish monetary stance in response to subdued inflationary pressures and a slowdown in economic growth.
This environment typically diminishes the appeal of cash and bonds, making gold—a non-yielding asset—more attractive to investors seeking stable returns.
UBS notes that declining yields in other asset classes are likely to drive increased capital flows into gold, boosting its value.
In addition to monetary policy, geopolitical uncertainties continue to underpin demand for gold. From heightened tensions in Eastern Europe and the Middle East to ongoing concerns over U.S. government debt, these factors have elevated the appeal of gold as a reliable store of value during periods of market volatility.
UBS flags that the persistent uncertainty surrounding global trade dynamics and the risks associated with fiscal deficits in major economies further contribute to the metal’s attractiveness.
UBS also mentions the broader structural trends supporting gold in the medium to long term.
These include rising investment in transition metals for renewable energy projects, which is expected to create overlapping demand dynamics, and the evolving macroeconomic landscape shaped by deglobalization and demographic shifts.