(Kitco News) – The U.S. elections and geopolitical risks are likely to drive gold prices even higher in the near term and into 2025, but the impact of high prices and increased supply should end the yellow metal’s rally later next year, according to precious metals analysts at HSBC.
In a research note, HSBC said gold is enjoying several strong tailwinds, and this should continue into next year.
“Our precious metals analyst believes Gold has entered a new price paradigm, which will probably remain above $2,200 per ounce, supported by a mix of bullish factors, including ‘safe haven’ demand prompted by geopolitical risks and economic uncertainty,” they wrote. “Mounting fiscal deficits are also encouraging Gold demand. Global monetary easing and expectations of further easing have increased speculative demand for Gold.”
HSBC analysts expect the rally to moderate in the second half of 2025 as high prices and supply increases impact the market.
“[A] combination of physical and financial market factors may tame the rally, as we move through 2025, with Gold prices likely to be moderately lower by end-2025,” they said. “In the physical market, high Gold prices are driving outright declines in Gold jewellery purchases, alongside lower Gold coins and bar demand. At the same time, global Gold output is on an upward trajectory at least for this and next year, with mining being the biggest single source of new supply to the market.”
“High Gold prices are also stimulating scrap supply of Gold,” they added. “In other words, Gold may face headwinds from weaker demand for jewellery and bar & coins and rising mine supply and recycling levels.”
The analysts also warned that they see gold-backed exchange-traded funds (ETFs) continuing to liquidate their holdings, and “central bank demand may also moderate in the face of high prices.”
After opening at a high above $2,736 per ounce, spot gold prices have traded in a $20 range on Friday morning. Spot gold last traded at $2,729.59 per ounce for a loss of 0.24% on the session.
