2025 Gold Outlook: Will the Gold Price, which surged at the beginning of the year, continue to rise?

Current Status of Gold Price Rise in 2023

This year, gold prices have shown a remarkable upward trend. As of July, the domestic gold market price for 1 don(3.75g) is traded at 635,000 KRW, representing a 43% increase compared to the same period last year. The international market is also experiencing active movements. Based on spot gold(XAU/USD), the price is around $3,337 per ounce, showing a 27% increase since the beginning of the year and a 39% rise compared to the same period last year.

While the movements of domestic and international gold prices are closely correlated, the steady upward trend until May is particularly noteworthy. Recently, the rate of increase has somewhat slowed, but signs of a sharp decline are not yet evident.

Key Factors Driving Gold Price Increase

Trend of Global Currency Diversification

As countries strengthen de-dollarization policies, demand for gold is increasing. China is actively promoting the use of the yuan in trade transactions to expand its international presence, and is lowering its dependence on the dollar through currency swap agreements. India is also working to expand the use of its local currency, the rupee, in transactions with major trading partners.

Reducing dependence on the dollar ultimately increases interest in alternative assets, including gold, which is a significant backdrop for the rising gold prices.

Rising Geopolitical Instability

Historically, gold is a safe-haven asset sought by investors during times of high uncertainty. Recent intensification of US-China trade conflicts, tensions in Eastern Europe, and conflicts in the Middle East have all contributed to maximizing this demand.

The pattern repeats history, as during the 2008 global financial crisis and the 2020 pandemic, when doubts about economic stability caused gold prices to surge significantly.

Pessimistic Outlook for Major Countries’ Economies

As the economic uncertainties in developed countries grow, the value of gold as a safe asset is being reevaluated. Concerns over inflation in the US and weakening growth momentum in Europe are simultaneously affecting investor sentiment. In this environment, gold is emphasized as an inflation hedge and a tool for asset protection.

Central Bank Rate Cuts

Rate cuts diminish the attractiveness of fixed-income assets like deposits and bonds. Consequently, investment funds tend to flow into gold, which has no dividends but preserves value. Additionally, rate cuts are often perceived as signals of economic weakness, prompting investors to avoid risky assets and turn to safe-haven assets like gold.

Experts’ Predictions for Gold in 2025

Dominance of Bullish Outlook

Major financial institutions project that gold prices will continue to rise beyond current levels by 2025. Early predictions from leading banks and refining companies at the start of the year suggested around $2,795 per ounce by year-end, but current prices already surpass this significantly.

Global investment banks like JP Morgan initially set a target of $3,000 per ounce for 2025, but have since raised this forecast. JP Morgan recently adjusted its 2025 target to $3,675 per ounce, and with five months remaining in the year, considering current prices, achieving this target is deemed highly likely.

Bearish Outlook Exists but Less Likely

Some financial institutions have mentioned the possibility of gold falling to around $2,500 per ounce by the end of the year. This would require about a 25% decline from current levels, but given the strong upward momentum, the likelihood of such a drop is considered low.

Conclusion: A Time for Cautious Optimism

The overall outlook for gold in 2025 remains positive. As global economic uncertainties persist and the importance of gold as a safe asset is reaffirmed, many experts anticipate further gains. However, some analyses suggest potential corrections in the second half of the year, so prudent risk management and position adjustments are essential when considering gold investments.