Macro Intelligence: is gold set to outshine other investments in 2025?

Written by Juliette Saly

Golden outlook

In this week’s edition of IG Macro Intelligence, we take a look at gold and whether it can continue to shine in 2025.

Time to shine

Gold had a stellar 2024, rising more than 25% to post its biggest yearly gain in 14 years.

Spot gold daily chart

Federal Reserve (Fed) interest rate cuts, sustained geopolitical risks, and purchases from global central banks powered its performance, making gold one of the best-performing assets of 2024.

Top performing assets chart

Gold’s gains over 2024 outstripped other commodities, as iron ore and lithium tumbled throughout the year.

Metals sector performance chart

Will the gains continue in 2025?

Uncertainty over the Fed’s direction, potential trade wars sparked by a second Trump presidency, and China’s efforts to stimulate growth could all see the precious metal continue to shine.

Tim Waterer from KCM Trade thinks many factors are working in gold’s favour: ‘If gold is to replicate its gains from last year, it would need to move to around the $3300 level to repeat last year's performance.'

Waterer further states, 'the risk to that scenario is if the Fed has to reverse course due to pro-growth, potentially pro-inflationary policies. A move from rate cuts to a pause or, in an outside scenario, an increase in rates could be an obstacle for the gold price. But overall, the outlook for gold remains fairly bullish.’

Driving demand

Asia makes up more than 60% of gold demand, with China and India being the world’s largest consumers.

In 2024, Chinese demand for gold jewellery weakened to its lowest level since 2010, according to the World Gold Council. Meanwhile, purchases from the People’s Bank of China (PBoC) also slowed, with total gold demand down 19% year-on-year (YoY).

Chinese gold demand chart

The World Gold Council projects a narrower decline of around 3% in Chinese gold consumption in 2025, as authorities push to achieve growth targets, with further cuts by the PBoC likely.

While there are fears that China’s gold jewellery market may be near saturation, bar and coin investment is expected to remain healthy. Adding to stabilisation expectations are potential gold purchasing announcements from the PBoC.

Demand from India is expected to remain strong, particularly as the country’s economic growth stays above 6.5%.

Geopolitical influences

The risk of trade wars under a second Trump presidency is likely to see gold maintain its position as an effective hedge in 2025.

‘Gold should be considered a diversifier within an investor's portfolio, offering protection against inflation and geopolitical risks. Inflation may rise again under a second Trump administration, reinforcing a bullish outlook for gold in 2025.’

Barry Dawes shared: ‘Gold prices are rising despite a strong US dollar. The Trump administration is set to make changes starting 20 January, continuing demand for gold. We should see record gold prices in 2025 and for the next few years.'

Golden opportunities

Ausbiz recently asked esteemed guests what their 2025 stock picks are. Out of the '12 Stocks of Christmas,' two are Australian Securities Exchange (ASX)-listed gold miners.

• Newmont Corp (ASX:NEW)

Henry Jennings from Marcus Today favours Newmont Corp (ASX:NEW), the world’s largest gold miner, which is dual-listed on both the United States (US) and Australian markets.

Macquarie recently upgraded Newmont to ‘outperform,’ with a near 41% upside in its target price of $86 per share. Analysts note that a softening Australian dollar outlook has increased their estimate for the stock.

Newmont recommendation chart

However, ASX Tradewatch data shows Newmont shares in a downward trend, suggesting market participants see better opportunities elsewhere.

Newmont daily chart

• Andean Silver Limited (ASX:ASL)

Meanwhile, Jonathan Tacadena from MPC Markets favours gold and silver miner Andean Silver Limited.

The stock is not widely covered, but Refinitiv indicates two 'buy' recommendations, with a target price of $2.88, suggesting almost 240% gain potential from current levels.

Andean Silver recommendation chart

Shares rose 200% in 2024 after trading sideways in 2023.

Technical data suggests Andean Silver Limited could be on a downward trajectory, with the 5-day moving average (MA) falling below the 20-day MA.

Andean Silver daily chart

• Evolution Mining (ASX:EVN)

Evolution Mining rose almost 22% in 2024.

Analysts are neutral on the stock, with an average hold recommendation and a target price of $4.76, suggesting a 2.7% drop from current levels.

Morgan Stanley believes many resource stocks are skewed to the upside from a risk/reward basis as the market awaits more clarity on US tariffs and China stimulus.

Morgan Stanley prefers Evolution Mining for its copper exposure and high free cash flow generation. The broker has an equal-weight rating on the stock with a $4.95 target price.

Evolution Mining recommendation chart