(Kitco News) - The gold market will need to fire on all cylinders if prices are going to hit $3,000 an ounce in 2025, which is unlikely, according to one market analyst.
In his 2025 and 2026 price outlook, Bernard Dahdah, a precious metals analyst at Natixis, said he sees gold prices holding relatively steady at current levels through the next two years. In his base case scenario, he expects gold prices to average around $2,725 an ounce in 2025 and $2,775 an ounce in 2026.
“In our view, we would mainly need Western demand to be coupled with a strong return in Chinese consumers in order to take prices and keep them above $3,000/oz.,” he said in the report.
At the start of the year, gold demand was largely driven by central bank demand and Chinese consumers; however, Dahdah noted that demand from these two segments of the market has slowed down as prices remain near record highs.
While demand has slowed in these two areas, it has picked up in another important one, he highlighted. Western investors have jumped into the market as the Federal Reserve has embarked on a new easing cycle.
“We are starting to see correlations between gold and the traditional movers (U.S. yields and Western investor demand) return toward their historic relationship,” he said.
Looking ahead, however, Dahdah said that Federal Reserve rate cuts might not have the same impact on price action.
“As it currently stands, we think that the gold market has largely factored in the 2025 rate cuts with a potential terminal rate of 3% expected in October. Into 2026, we think gold prices would make marginal gains as the rate cut cycle ends,” he said.
While investment demand will support prices, Dahdah said that China will continue to play a pivotal role. He pointed out that Chinese demand has dominated the marketplace, with domestic consumption accounting for 33.5% of total global demand in the first half of the year.
Dahdah said that Chinese gold demand next year will depend on how effective the Chinese government is with potential stimulus measures as it looks to support its slowing economy.
“For the time being, Chinese investors, who were buying into gold amid concerns of local market turbulence and a sharp drop in real estate prices, are holding back on buying more gold as they weigh a potential equity market rally,” he said.
Dahdah added that he also expects central bank gold demand to continue supporting prices through the next two years.
“The U.S. debt ceiling issues and the internal political sabre-rattling around that issue have only further eroded trust in the USD,” he said.
