Three reasons to own gold into 2025

Gold is on track for its best week in more than a year, and UBS thinks the precious metal has even further to go. On Friday, spot gold rose about 1% amid increasing tensions between Russia and Ukraine . That helped drive gold’s week-to-date gain above 5%, on pace for the largest weekly percentage increase since October 2023. Gold reached record highs in late October and has fallen nearly 2% in November after President-elect Donald Trump’s White House victory, but has still rallied more than 30% this year. XAU= YTD mountain Gold / US Dollar Spot, year-to-date But there’s still more room for bullion to run, even from current prices, said UBS Global Wealth Management strategist Sagar Khandelwal in a report out Thursday. Heightened geopolitical uncertainty is but one catalyst that can drive gold higher into next year, he said. Secondly, the global interest rate-cutting cycle will also stretch into 2025, which will serve as another driver of higher gold prices. That’s true even as markets grow more cautious on the number of interest rate cuts that are likely in coming months. The CME Group’s FedWatch Tool shows the market pricing in the equivalent of three quarter percentage point reductions through the end of next year, down from previous expectations. Thirdly, the UBS strategist cited more inflows into gold exchange-traded funds. The third quarter saw the most new cash pouring into gold ETFs since the first quarter of 2022, he said. Moreover, a push among central banks to diversify their reserves away from the dollar could also provide some additional support for gold, he said. “We expect the de-dollarization trend among central banks and private asset managers to continue,” Khandelwal said. “We estimate central banks bought around 900 metric tons of gold in 2024, and these volumes can be sustained well above the prior decade’s average of around 325 metric tons a year.”