(Kitco News) - Pro-business and America-first policies from President-elect Donald Trump have drained the wind from gold’s sails heading into the new year; however, one Canadian bank expects gold’s rally is far from over.
While it could take some time for the market to adjust to Trump’s economic policies, analysts at CIBC said they remain bullish on gold in 2025. The analysts noted that investors shouldn’t be surprised by gold’s current struggles, as the same thing happened in 2016 when Trump won his first term in office.
In its 2025 outlook, the Canadian bank reiterated its summer prediction that Trump will be good for gold.
“It may take a few quarters, but reality will eventually set in on inflationary pressures, and while this may ultimately call the rate-cutting environment into question, we believe wealth preservation and flight to safety for non-U.S.-based investors and central bankers will continue to support gold prices well into this decade,” the analysts said.
CIBC sees gold prices averaging around $2,800 an ounce next year, with most of the gains coming in the second half of the year. The bank also sees prices averaging $2,800 in 2026, with prices slightly declining to $2,700 in 2027.
In its long-term forecast beyond 2029, the bank projects prices will average around $2,250 an ounce, up from its previous estimate of $1,975 an ounce.
Meanwhile, CIBC sees silver prices averaging around $35 an ounce in 2025. The market is expected to remain steady at around $35 an ounce in 2026. Prices could dip slightly in 2027, with an average price of $34.50 an ounce.
The analysts said they are bullish on gold and silver as markets prepare for Trump’s unpredictable administration. Last month, the incoming President threatened to impose 25% tariffs on Mexico and Canada if they didn’t tighten their respective borders. Over the weekend, he then threatened BRICS nations with 100% tariffs if the trading bloc developed its own settlement currency to avoid the U.S. dollar.
“We anticipate higher tariffs and the potential for trade wars, lower interest rates, and less regulation, all of which we expect will support higher gold and silver prices,” the analysts said. “We believe Trump’s implementation of tariffs could lead to retaliatory tariffs on U.S. exports, driving inflationary pressure and supporting gold prices, which have historically risen alongside inflation.”
At the same time, analysts expect gold to remain an attractive safe-haven asset as geopolitical uncertainty remains elevated through 2025.
“On the geopolitical uncertainty front, we believe Trump’s unpredictable style will influence his foreign policy plan, which could provide tailwinds for the gold price throughout his term. Trump campaigned on an anti-war ticket, previously claiming he would end the Russia-Ukraine crisis quickly if elected, and also commenting during his campaign that he wanted the Israel-Hamas war to end. However, he has yet to announce specific measures surrounding his plan,” the analysts said. “We believe geopolitical uncertainty surrounding the resolution of both conflicts will continue to prevail in the near term and expect this to provide continued support for gold prices.”
As uncertainty continues to dominate global financial markets, CIBC expects to see renewed demand from central banks and the investment community. The analysts anticipate investment demand will pick up, with potentially 450 tonnes of the yellow metal flowing into gold-backed Exchange-Traded Funds (ETFs).
Although there are risks that the Federal Reserve might have to slow the pace of its easing cycle, CIBC noted that higher inflation pressures will mean real rates will still be lower, creating a positive environment for gold.
At the same time, the Canadian bank sees the potential for another record year of central bank demand. Analysts forecast that central banks could buy more than 1,000 tonnes of gold next year.
Sponsored by Matador Technologies Inc. - Bringing gold and real-world assets to Bitcoin.
Visit https://www.matador.network/kitco.
