Gold prices have been on the rise over the past four days, bringing prices into positive territory for the year. Despite potential obstacles, Capital Economics is optimistic about the long-term outlook for gold, with the firm’s Commodities Economist, Kieran Tompkins, predicting prices to reach $2,100 an ounce by the end of this year and $2,150 by 2025.
Tompkins highlighted the upcoming Federal Reserve easing cycle as a key factor driving gold prices higher. While the market has already exceeded Capital Economics’ year-end target, Tompkins remains bullish on gold, citing expectations for a rate cut by the Fed in June.
In addition to monetary policy, Tompkins pointed to the weakening U.S. dollar as another factor that could support higher gold prices in the coming years. He noted that while the dollar may only see slight softening this year, there is potential for more weakness in 2025.
Moreover, Capital Economics expects renewed investor demand for gold, particularly through gold-backed exchange-traded funds. Tompkins emphasized that falling US Treasury yields could further boost gold prices by reducing the opportunity cost of holding the non-interest-bearing asset.
Overall, Capital Economics anticipates a higher gold price this year and beyond, driven by a combination of Fed easing, a weaker dollar, and increased investor demand. Investors may want to keep a close eye on these factors as they consider their positions in the precious metal market.
