Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
After the Federal Reserve announced a 25 basis point interest rate cut last week, gold prices fell under pressure as the market cooled expectations for the central bank to continue cutting rates in 2025.
Spot gold was trading at $2,614.10 per ounce by the close of trading on Monday (December 23), down 0.3%. Year-to-date, the precious metal has accumulated gains of more than 25% and hit record highs multiple times, supported by Fed rate cuts, safe-haven demand and global central bank buying.
In an interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said he expects the price of gold to continue to hit all-time highs in 2025.
According to Stanley and his team’s 2025 gold price forecast, the precious metal has a 50 percent chance of trading between $2,600 and $2,900 an ounce next year, a 30 percent chance of trading between $2,900 and $3,100 an ounce, and a 20 percent chance of falling to $2,200 to $2,600 an ounce.
Gold has been consolidating for the past two months due to a shift in investor expectations about the Federal Reserve’s monetary policy. Last week, at the U.S. central bank’s last monetary policy meeting of the year, committee members said they plan to cut interest rates only twice in 2025. This contrasts with the four rate cuts expected back in September.
However, Milling-Stanley points out that gold has proved to be a much broader global financial asset over the past year. The Fed’s hawkish stance at the beginning of 2024 did not prevent gold prices from hitting record highs, and it is not expected to prevent them from rising further in 2025.
If the Fed is forced to take a more hawkish stance next year, it will likely be because of rising inflation, which would be good for gold, he added. Holding some gold in your portfolio in an inflationary environment, no matter what the Fed does, is something that has been recognized by investors.
As for the biggest drivers of gold, Milling-Stanley expects central bank demand to remain the dominant force in the market. Meanwhile, demand in Asia will remain strong as consumers look to protect themselves from economic uncertainty and geopolitical instability.
Analysts point out that China’s economy is currently struggling, and it is almost inevitable that investors will turn to gold as a traditional investment as they abandon the stock and property markets. In addition to China and India, Vietnam, South Korea and Thailand are also buying more gold.
