Gold's long-term uptrend remains intact
Ahead of the new year, Tom Bruce, macro investment strategist at Tanglewood Total Wealth Management, told Kitco News in an interview that he is “pretty positive” on gold, despite some tough headwinds facing the precious metal.
Bruce said that, although he did not give a specific price, he predicted that gold prices would increase by about 10% next year, but still below 3,000 USD/ounce.
He believes the biggest near-term challenges for gold in 2025 will be rising real yields and solid economic growth in the US.
“We believe that the 10-year bond yield has now bottomed out. It could easily exceed 5%. If inflation does not change much, real interest rates will rise significantly,” he said.
However, Bruce added that while gold may experience short-term volatility due to higher real yields, the long-term uptrend in the precious metal remains intact as central banks continue to buy gold, creating a new dynamic in the market.
He stressed that central banks have not stopped buying gold, as they seek to diversify away from the US dollar.
“During the Cold War, gold was about 30% of central bank reserves. A few years ago, I believe it was about 10%. It may not go back to 30%, but if it goes up to 20% or 25%, that’s still a huge demand for gold in the medium term,” Bruce said.
Should I buy gold in 2025?
While gold may see modest growth in 2025 compared to 2024's nearly 30% gain, Bruce said it is still an important asset for investors to own.
He added that his firm currently recommends holding 9.5% of a portfolio in gold, which is a higher than usual proportion.
“This is almost the highest level we recommend, because gold acts as an important hedge in a portfolio. If everything else goes wrong, gold is likely to do well. So we always see it as a core component,” he said.
While many investors have turned away from gold in 2024 as high bond yields increase the opportunity cost, Bruce said many of his clients are still willing to keep gold in their portfolios.
“The market is in a positive mood. It has been a great year for gold, but that doesn’t mean the story is over,” Bruce said.
See more news related to gold prices HERE...
