Despite the decline, world gold prices still maintained the level of 2,630 USD/ounce. Neils Christensen - analyst of Kitco News commented that gold prices are holding high as this precious metal continues to react to uncertain geopolitical changes related to the upcoming administration of President-elect Donald Trump.
However, one market analyst still expects gold's uptrend to continue through 2025. In a recent interview with Kitco News, Nitesh Shah, Head of Commodities & Macroeconomics Research at WisdomTree, said he expects the US dollar to weaken in 2025, creating favorable conditions for gold prices to rise.
He added that while Donald Trump's "America First" policies could support the dollar early next year, it will be difficult to maintain that momentum as government budget deficits continue to rise.
“It is very likely that public debt will increase and that will weaken the dollar,” he said.
At the same time, Shah noted that the Federal Reserve's easing cycle will help push bond yields lower, another positive factor for higher gold prices.
“Now that we are back in a rate-cutting environment, bond yields have fallen and investors are willing to buy gold again,” he said in a new research note.
While Shah is bullish on gold, he also believes there will be a limit to how much gold will grow next year. Shah predicts gold prices will hover around $2,850 an ounce in the fourth quarter of next year.
"Still a pretty positive outlook for gold. I initially predicted $3,000 an ounce, but according to my updated model, bond yields need to fall significantly from current levels to get there," he said.
Although bond yields are expected to fall, Shah said there is a limit to how far the Fed can lower interest rates in the new year. He currently expects rates to bottom out in the range of 3.25% to 3.50%.
He stressed that many of Mr Trump’s proposed policies, including extensive tax cuts, are seen as inflationary. At the same time, lower taxes would also increase the government’s debt.
Looking beyond US monetary policy, Shah is bullish on gold as geopolitical uncertainty continues to support the “de-dollarization” trend in global financial markets. While central bank gold purchases may slow compared to recent years, Shah still expects central banks to continue to increase their gold holdings.
Shah predicts China will return to the gold market.
“It’s not a question of if, but when. Frankly, I don’t think they can wait for much lower prices, because they can wait forever,” he said. “China still has a relatively low share of gold compared to other foreign exchange assets and they will want to increase that if they don’t want to be dependent on the G7 economies.”
At the same time, Shah believes that in a world full of uncertainty, gold will remain an important safe-haven asset.
See more news related to gold prices HERE...
