(Kitco News) - The gold market continues to attract attention as it prepares to end the first month of 2025 at a record high, following the trend of 40 all-time highs in 2024.
With bullish momentum clearly picking up, some analysts have said that this is only the start of what looks to be a bigger move. In a recent interview with Kitco News, Michele Schneider, Chief Strategist at MarketGauge, said that if gold sees a clear break above $2,800 an ounce, it can easily reach $3,000.
As of 4 p.m. ET, February gold futures last traded at $2,849.40 an ounce, up nearly 2% on the day. Meanwhile, silver is outperforming as prices have pushed solidly above $32 an ounce. March silver futures last traded at $32.475 an ounce, up 4% on the day.
Ahead of the new year, many analysts were bullish on gold and silver, but most were not expecting the precious metals to see their full potential until the second half of the year. However, some analysts have noted that rising geopolitical uncertainty caused by policies enacted by the new Trump administration is creating safe-haven demand.
Notably, gold’s record high comes a day after the Federal Reserve left interest rates unchanged and started signaling that the easing cycle may be over sooner than markets anticipate.
In the press conference following the central bank’s latest monetary policy decision, Federal Reserve Chair Jerome Powell said that the committee is in no rush to cut rates as the inflation outlook remains uncertain and the labor market remains healthy.
Ricardo Evangelista, Market Analyst at ActivTrades, said that gold’s safe-haven appeal is stronger than the threat of higher interest rates.
“Despite Jerome Powell’s remarks suggesting that rates may remain higher for longer due to persistent inflationary risks and a robust labor market, the reaction in U.S. Treasury yields was muted, as investors remained concerned about the potential fallout from the new administration’s protectionist policies,” he said. “This environment is favorable for non-yielding gold, which continues to attract safe-haven flows from investors seeking protection amid economic uncertainty.”
However, Paul Williams, managing director at Solomon Global, said in a note that gold’s rally to record highs is driven by more than just the impact of a President’s controversial policies. He noted that global geopolitical uncertainty remains elevated.
“Gold’s performance highlights the complex interplay of global factors impacting today’s economy,” said Williams. “This is not a temporary spike or just a ‘Trump Bump’ but a reflection of an uncertain geopolitical landscape and deep-rooted instability in the global economy. The shifting world order is becoming increasingly volatile, making gold an enticing option for hedging risk and safeguarding wealth.”
Robert Minter, Director of ETF Strategy at abrdn, said that while gold prices have hit record highs, investor demand in gold- and silver-backed exchange-traded funds remains fairly muted, and said this shows how much potential remains in the marketplace.
Minter added that he expects it’s only a matter of time before investors turn to gold as a safe-haven asset, as current market conditions are like “trading in a mosh pit. You just can’t see what is coming next.”
While gold is attracting a lot of attention, commodity analysts at TD Securities said that gold’s rally could be running out of momentum, and investors should keep their eye on silver.
“Overall, downside risk still remains limited in gold, but the upward impulse for the ongoing rally is starting to subside. Gold bulls need to reload some bullets. The set-up for flows in silver is superior,” the analysts said. “While a few false dawns have emerged in the past, spot and futures prices are both finally breaking out of the wedge that has contained silver markets from the 2024 local top not reached since 2012. The breakout in futures markets is relevant as it is likely to catalyze CTA buying activity, which directly attracts new directional inflows that may become self-reinforcing.”
