Introduction to Gold Prices
Gold is expected to have its strongest annual performance since 1979 in 2025, according to State Street Investment Management. The company’s APAC gold strategist, Robin Tsui, believes that while the structural bull cycle remains intact, there will be a phase of consolidation rather than an uninterrupted rally.
Factors Affecting Gold Prices
State Street Investment Management expects gold prices to stabilize in the $US4000–4500 range, supported by US Federal Reserve easing, sustained central bank buying, and resilient exchange-traded fund (ETF) inflows. However, a move toward $US5000 per ounce cannot be ruled out, which would require a combination of factors such as heightened geopolitical tensions, market-shocks, rising risk of stagflation, accelerating de-dollarisation, and more allocations to gold from institutional investors.
The Role of the Federal Reserve
The Federal Reserve’s stance is expected to have the greatest short-term impact on gold in 2026, compared with ETF inflows and central bank buying. Its influence on interest rates, the US dollar, and market sentiment means a dovish shift with anticipated rate cuts could lower the opportunity cost of holding gold and trigger strong ETF inflows, boosting price momentum. Central bank purchases, meanwhile, are expected to provide stable, long-term support.
Opportunities and Risks for Gold
The biggest opportunities for gold in 2026 stem from its enduring role as a strategic hedge amid ongoing macroeconomic and geopolitical uncertainty. A slowdown in global growth combined with further Federal Reserve rate cuts would likely lower real yields and weaken the US dollar, boosting demand through ETFs and sustained central bank purchases. Structural growth in emerging markets, particularly India and China, also offers upside as institutional allocations expand. However, risks include a reflationary scenario where stronger US growth and higher interest rates lift the dollar, eroding gold’s appeal and triggering ETF outflows.
Conclusion
In conclusion, gold is expected to have a strong performance in 2025 and 2026, with prices potentially reaching $US5000 per ounce. The Federal Reserve’s stance, central bank buying, and ETF inflows are expected to play a significant role in determining gold prices. While there are opportunities for growth, there are also risks, such as a reflationary scenario, that could impact gold’s performance. As the global economy continues to evolve, it will be important to monitor these factors and their impact on gold prices.
