Why gold prices won't rise as much this year as they did in 2024

Dubai: Good news for gold shoppers! While gold prices are projected to rise in 2025, they may not increase as sharply as in 2024.

“In 2024, gold prices surged by a mammoth 27% to reach around $2,617 per ounce,” opined April LaVine, a Dubai-based precious metals retail analyst. “However, projections for 2025 suggest a more modest ascent, with estimates indicating a rise to $3,000 per ounce by year-end – a gain of 14.5%.”

Analysts at US-based global investment bank Goldman Sachs and several other industry majors shared a similar year-end projection, while also flagging some key imminent factors that are to contribute to this anticipated deceleration:

“Following a significant rally, markets often undergo periods of consolidation. The substantial gains in 2024 may lead to profit-taking and a stabilisation of prices, tempering the pace of increase in 2025,” said Brody Dunn, an investment manager at a UAE-based asset advisory firm.

“While central banks are expected to implement interest rate cuts, the magnitude may be less pronounced than in previous cycles. This could result in a diminished impact on gold's attractiveness as a non-yielding asset.”

Geopolitical tension effect

The geopolitical landscape, including tensions in the Middle East and Ukraine, has been influencing investor sentiment in most global markets. However, unless these tensions escalate significantly, their effect on gold demand may not intensify beyond current levels, noted Dunn.

“Central banks worldwide have been augmenting their gold reserves. While this economic trend supports gold prices, the rate of accumulation will most likely not accelerate, leading to a steadier influence on the market,” he added.

For consumers in the UAE, particularly gold buyers and jewellery shoppers, this forecast offers favourable implications. “The UAE, renowned for its vibrant gold markets and favourable pricing, could witness more stable gold prices in 2025 compared to the volatility of 2024,” added LaVine.

As of January 2, 2025, the global spot price of gold stands at roughly $2,617 per ounce. In the UAE, this translates to around Dh300 per gram. “Should gold reach $3,000 per ounce globally by year-end – a 14.5% increase – the price per gram in the UAE would rise to about Dh345,” she added.

“However, while UAE consumers can anticipate a corresponding uptick in local gold prices, this projected increase is notably less steep than the previous year's surge, suggesting a period of relative price stability, offering UAE shoppers and buyers a less volatile market for purchasing gold or jewellery.”

More buying opportunities?

For buyers and shoppers in the UAE, this environment may present opportunities to purchase gold and gold jewellery without the urgency prompted by rapidly escalating prices. Also, a more predictable pricing landscape allows for better budgeting and financial planning for both consumers and investors.

The predictable pricing landscape is particularly beneficial during events like festivals, weddings, or shopping sprees, when gold jewellery is in high demand, particularly in the UAE. Buyers can make purchases with more confidence, avoiding the urgency prompted by rapidly escalating prices.

In conclusion, while gold prices are expected to continue their upward trajectory in 2025, the rate of increase is likely to be more measured compared to 2024. This moderation bodes well for UAE buyers, offering a more stable and less volatile market for gold purchases.