Gold price on track for US$3,000/oz in 2025, analysts predict

While gold is trading at an all-time high of above US$2,700/oz, a bullish market anticipates prices will hit US$3,000/oz in 2025.

There are three factors that have caused the prices of gold and silver – the latter of which Mexico is the world's leading producer – to rise this year, according to Ana Azuara, a commodity markets specialist at Grupo Financiero Base: expectations of further interest rate cuts, risk aversion due to geopolitical tensions and the presidential elections in the United States.

“The Fed's interest rate is the most important, but the fact that almost all central banks have cut rates this year obviously puts upward pressure on the price of commodities in general, but mainly gold,” Azuara said in an interview with BNamericas.

“This is because interest rates are inversely correlated with commodities, because when interest rates rise, the opportunity costs of maintaining investments in these raw materials increase, because they don’t pay interest. Therefore, interest rate cuts support demand for commodities,” she added.

The second point is that the war in Ukraine and geopolitical tensions in the Middle East continue, with the latent threat of Iran entering the armed conflict in Israel.

“This also creates risk aversion, and gold is also considered a safe haven asset, and this risk aversion also increases its demand,” Azuara said.

Finally, the analyst said elections are a factor driving prices of precious metals such as gold to historic highs.

“This year almost all countries had elections… Obviously, elections in general also cause risk aversion and increase demand for gold. And right now we have the elections in the United States, which are the most important ones,” the analyst said.

Goldman Sachs reiterated its bullish stance and, like other financial institutions, predicts that gold prices will continue to rise and could reach US$3,000/oz in 2025.

Bank of America also sounded a bullish note on gold, saying it remains “the ultimate perceived safe haven asset” in the current macroeconomic environment amid growing concerns about US fiscal policies and their potential impact on Treasury yields, according to the bank’s commodity analyst Michael Widmer.

“I think that the price of gold can still reach or break new historical highs. I think that if it breaks the level of US$2,800/oz in a sustained manner, we could see the price of US$3,000/oz,” Azuara said.

“And obviously, as I said, there is still the US election to be held, and we still have to see if the Federal Reserve is going to continue cutting interest rates, and if it does, there is obviously a chance that the price of gold will continue to rise.” 

In Mexico, a string of gold projects involving US$1.6bn will add over 500,000oz/y to production this year and next, according to projections by mining chamber Camimex.

At the Tahuehueto project in Durango, Canada's Luca Mining is commissioning a mill at the underground mine and expects to reach commercial production by the end of the year.

Camimex expects that this year and in 2025, Terronera, owned by Endeavour Silver; Media Luna, owned by Torex Gold; Cerro Caliche, owned by Sonoro Gold; Cerro de Oro, owned by Minera Alamos; and Los Ricos Norte and Los Ricos Sur, owned by GoGold Resources, will also begin operations.

“Mining companies obviously benefit from the high prices of these commodities, just by thinking that if they produce exactly the same, their sales will be reflected in profits, because prices are super high,” Azuara said.

Mexico’s gold production fell 6.3% in 2023 to 4.47Moz, according to statistics agency Inegi. Output of the yellow metal grew 1.9% in January to August this year, according to official data.