According to ING analysts, commodities prices are likely to remain subdued in 2025 as the tensions between China and the United States could weigh on energy and commodity markets, but the outlook for gold remains bright.
In a 2025 outlook report, analysts said Trump’s pledge to impose tariffs on trading partners could disrupt markets including oil, metals and agriculture. The potential for escalating trade tensions is a downside risk, while markets are also waiting to see if and when China’s stimulus measures will take effects in commodity markets.
After testing the resistance level of $2,700 per ounce at the beginning of the week, spot gold prices closed at $2,656.90 per ounce on Friday (December 13), up 0.88% for the week.
Analysts believe that the People’s Bank of China resumed buying five tonnes of gold in November after a six-month pause, suggesting that demand from the central bank remains solid in 2025.
At the same time, recent economic data seems to suggest the Fed’s continued pace of rate cuts will be disrupted. Wells Fargo analysts said in their outlook earlier this week that they expect only one rate cut next year. Meanwhile, Bank of America recently forecast only two rate cuts in 2025.
Naeem Aslam, chief investment officer at Zaye Capital Markets, said gold investors should brace for possible weakness next week as the Federal Reserve may slow the pace of interest rate cuts given recent inflation data. However, given that many traders will be taking a break from trading due to the holidays, volume is likely to be light next week.
Lukman Otunuga, manager of market analysis at FXTM, is more neutral on gold, noting that the precious metal is in a tug of war. While the hawkish stance of the Fed is negative for gold, gold still retains a lot of bullish momentum. Otunuga believes rising U.S. Treasury yields are weighing on gold ahead of the Fed’s last policy meeting of 2024 next week. Still, after a year-to-date gain of nearly 30%, the trend on the weekly chart is firmly bullish.
Carley Garner, co-founder of brokerage DeCarley Trading, said that while she is neutral on gold for the rest of 2024, the market’s inability to sustain gains above $2,700 an ounce suggests prices will weaken and investors can look for opportunities to sell into rallies.
Michele Schneider, chief strategist at Marketgauge, said she expects gold prices to stabilize between $2,600 and $2,800 an ounce. The market is waiting, as always. She noted that outside of the Fed’s monetary policy, global interest rates are continuing to ease. At the same time, global debt continues to rise, which are two positive factors supporting gold’s rise.
According to Kitco News’ latest weekly gold survey, analysts are mainly neutral on gold’s performance next week, while retail investors are relatively optimistic, with about the same percentage of bullishness as the previous week.
