Gold has long been seen as a stable and valuable investment, particularly in times of economic uncertainty. This week, it is just £5 off a record high as the pound slumped to a 14-month low, sparking renewed interest in the metal as a safe-haven asset.
On Thursday, sterling gold reached £2,173 per Troy ounce, and in dollar terms, is at $2,675 per oz. Worldwide, ongoing geopolitical tensions, including conflicts in the Middle East and Ukraine, are contributing to increased demand for the precious metal as a safe-haven asset.
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Gold reached an all-time high of nearly $2,089 in 2020 as the Covid pandemic forced global lockdowns. It rose again above $2,000 per ounce during after Russia invaded Ukraine in February 2022.
Gold pays no interest and is not an income-generating asset. It usually falls in price when bond yields rise, which they have done amid jittery markets. It is often considered a safe bet in turbulent times, but others urge caution as it can be volatile, particularly when markets are soaring.
Is gold truly a reliable investment, and what can we expect in 2025?
Performance and predictions for 2025
2024 was a record-breaking year for gold, driven by economic uncertainty, inflationary changes, and increased demand, Rick Kanda, Managing Director at The Gold Bullion Company, said. ‘It’s predicted that by the end of 2025, gold will rise to $3,000 per troy ounce,’ he says, citing continued central bank purchases and economic instability as key factors in this potential rise.
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Geopolitical tensions, monetary policy shifts, and political events such as Donald Trump’s presidency and Justin Trudeau’s resignation have contributed to market volatility. Historically, such instability has driven investors toward gold as a safe-haven asset. With 2025 shaping up to be another uncertain year, many experts predict strong demand and rising prices.
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The broader investment landscape
At the Schroders Crystal Ball 2025 Investment Outlook event, Johanna Kyrklund, Chief Investment Officer at Schroders, spoke of diversification and identified decarbonisation as a key investment theme, along with bonds as a strong income-generating asset.
Gold has consistently demonstrated its resilience. Since 2003, its price has risen by around 570 per cent , reinforcing its reputation as an inflation hedge. Last year was particularly strong, marking gold’s best performance since 2010.
The impact of central banks and interest rates
Despite an impressive 27 per cent surge in 2024, Goldman Sachs has adjusted its bullish gold forecast. The firm initially predicted it to hit $3,000 per ounce by the end of 2025, but has now pushed this target to mid-2026 due to a slower pace of expected interest rate cuts. Their revised year-end 2025 target stands at $2,910 per ounce, reflecting a 10 per cent upside from current levels.
Federal Reserve policies will play a significant role in gold’s trajectory. After a 25-basis-point rate cut last month, Fed Chair Jerome Powell has signalled a cautious approach to further easing. With only one or two additional rate cuts expected this year instead of the previously anticipated three to four, the metal’s short-term gains may be tempered.
The future of gold as an investment
Gold’s appeal as a safe-haven asset remains strong, especially with global central banks continuing to increase their reserves. While speculative demand has fluctuated, structural support from central bank purchases provides a solid foundation for gold’s long-term value.
In 2024, the metal benefited from de-dollarisation efforts, with several countries seeking to diversify their reserves away from the US dollar. This trend is likely to continue.
With gold nearing record highs and experts predicting continued growth, 2025 may be another promising year for investors. However, economic shifts, interest rate policies, and geopolitical developments will all play crucial roles in shaping the market.
How to invest in gold
For those looking to invest in gold in 2025, Rick Kanda provides several tips:
1. Buy coins
Gold coins offer a good balance between affordability and liquidity. Coins such as gold sovereigns and Britannia coins are Capital Gains Tax-free in the UK, making them attractive investment options. Knowing the purity of your gold coins is crucial, as different coins have varying levels of gold content.
2. Buy bars
Gold bars can be a cost-effective way to invest in physical gold due to lower manufacturing costs compared to coins. Small investors should consider a mix of bars and coins to optimize their investment strategy.
3. Keep on top of market trends
Monitoring gold prices and financial news can help investors make timely decisions. While predicting gold price movements is challenging, staying informed on economic trends and geopolitical events can offer valuable insights.
4. Consider ETFs and pooled investments
For those who do not want to hold physical gold, Exchange-Traded Funds (ETFs) and pooled investments offer alternatives. ETFs trade on stock exchanges and track the spot price of gold, while pooled investments allow investors to buy shares in a fund that holds physical gold. However, these options come with counterparty risks, so investors should carefully research fund managers and security measures.
