(Kitco News) - Gold’s path to record highs in 2025 appears more complex heading into the new year, according to one market analyst.
In her 2025 precious metals outlook, Nicky Shiels, Head of Research & Metals Strategy at MKS PAMP, said she expects gold to trade within a fairly wide range between $2,500 and $3,200 an ounce, with the precious metal’s fate largely determined by the Federal Reserve. At the same time, MKS forecasts gold prices to average $2,750 an ounce for the year, up 14% from this year’s current annual average.
“Gold prices at $3,000+ or $2,500- depend on whether the Fed is ahead or behind the Trumpflation curve; we expect them to be behind, leading to falling real rates and a softer US$ in the latter half of the year,” she said. “Structurally, the positive feedback loop of high-for-longer inflation, ongoing deglobalization, currency debasement, central bank dedollarization, messy and unpredictable geopolitics, unsustainable global debt paths, and an under-owned general investor community ensures that gold remains a safe asset diversifier.”
Although gold has solid fundamental support in 2025, Shiels noted that the probability of a bear market next year is higher than that of a bullish scenario.
In her report, Shiels stated a 30% chance of gold trading closer to $2,500 an ounce next year as President-elect Donald Trump drives American exceptionalism with pro-growth policies such as tax cuts and deregulation.
At the same time, America-first policies are expected to push consumer prices higher, forcing the Federal Reserve to slow its easing cycle, even as it lags behind the inflation curve.
Shiels also cautioned gold investors that the new administration’s focus on cryptocurrencies could divert some investors away from the precious metals market next year.
Meanwhile, MKS assigns only a 20% chance of gold prices exceeding $3,000 an ounce in 2025.
Among the bullish factors Shiels highlights for gold is continued central bank buying as emerging markets diversify away from the U.S. dollar.
While Trump’s America-first policies have the potential to support the domestic economy, Shiels also noted that they could drive government debt higher, exacerbating inflation pressures that may overwhelm the Federal Reserve.
In this scenario, Shiels said the U.S. dollar would weaken, providing a tailwind for gold.
Although Shiels is somewhat lukewarm on gold, she sees significant potential for silver. MKS expects silver prices to trade within a range of $28 to $42 an ounce, with an average price of $36.50 an ounce, up 23% from the current annual average.
Shiels said that global easing measures should help stimulate the economy, boosting industrial demand for silver in 2025.
“Silver is set to outperform all precious metals in 2025, given synchronized central bank rate cuts, a more supportive China and U.S. macroeconomic backdrop, still-strong solar demand, and ultimately a weaker US$ trajectory,” she said. “While China has reached late-growth PV capacity, the rest of the world is picking up the slack, being in an early growth phase and increasingly adopting next-generation (TOPCon vs. PERC) technology with higher silver loadings.”
Although industrial demand will be a critical pillar of support for silver, Shiels said the metal needs to attract new investment demand to reach her target highs.
“Silver’s upside will still hinge on investor participation outweighing any potential contraction in global industrial demand due to the threat of Trump tariffs. Investment demand—both institutional and retail—should outpace the mild inflows seen in 2024,” she said.
According to MKS modeling, silver has a 35% chance of exceeding $40 an ounce in the new year.
Meanwhile, Shiels assigns a 15% chance of silver prices falling back to $22 an ounce, with the biggest risk being a global recession that weakens industrial demand.
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