Gold price hits a new high in 2025 – could it soar higher?

The gold price reached record highs in 2024 and has briefly broken through these levels, as inflationary fears resurface and investors flee big tech stocks

Concept image of gold bars and gold coins
With gold bars typically weighing about 400 ounces, the latest surge in price means each bar is now worth more than $1 million
(Image credit: brightstars via Getty Images)

The much-followed price of gold climbed to new highs in 2024, but briefly broke through them on 30 January as inflationary fears and a flight from AI stocks drive gold demand higher.

A rush to invest in gold sent the commodity's price to a record high of $2,790 in October 2024 and some experts are predicting that it could break the $3,000 barrier before long.

Gold is currently priced fractionally below its all time high, at just over $2,789 per troy ounce.

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"Total gold demand in the third quarter surpassed US$100 billion for the first time,” says Juan Carlos Artigas, global head of research at the World Gold Council.

Over the past five years, the gold price has increased by nearly 80%.

With bars of gold bullion typically weighing about 400 ounces, the latest price tag means each bar is now worth more than $1 million.

Fears of resurgent inflation have driven investors towards the yellow metal, which has historically been viewed as a safe-haven asset in times of economic uncertainty. Donald Trump’s return to the White House has markets on high alert for inflation to reappear; the Federal Reserve ended its interest rate cutting cycle, though UK interest rates are still expected to fall in February.

“With US President Donald Trump still dangling the threat of tariffs over near neighbours and far foes, there are concerns that they could push up US consumer prices, increase inflation, and lead to interest rates staying higher for longer,” says Susannah Streeter, head of money and markets, Hargreaves Lansdown. “Gold is seen as a hedge against inflation, and a safer refuge amid volatility.”

With so much economic and geopolitical uncertainty around, it’s small wonder many investors believe that now is a good

Central banks have also been buying up gold, especially in countries like Russia and China, which has helped inflate the price. Meanwhile, the metal is increasingly being used in other industries like nanotechnology and artificial intelligence (AI), as well as in cancer therapy and to fight malaria.

We take a closer look at the reasons behind the global gold rush, before delving into whether more rises are on the horizon.

Why is the gold price rising?

There are three fundamental factors that have caused the gold price to rise over recent months: interest rates, central bank purchases, and geopolitical uncertainty.

Interest rates

History suggests the gold price does well when interest rates fall.

This is because central banks typically cut interest rates in an attempt to encourage growth when the economy is stagnating. Stock markets usually struggle in periods like this, so gold can be a good hedge.

“Gold, which pays no interest, becomes more attractive in a low interest environment”, says Josh Saul, chief executive of The Pure Gold Company.

The Fed’s rate-setting decisions are particularly important in determining the gold price – more important than the decisions made by other policymakers like the Bank of England, for example.

“For most of the third quarter, Western investors flocked back to gold as central banks started cutting interest rates,” says Artigas.

Central bank purchases

Central banks buying up gold is also causing the price to soar, with unprecedented purchases from emerging markets like China and India, as they hedge against global economic fragmentation.

Anita Wright, independent financial adviser at Bolton James, notes: "Central banks, particularly in countries like Russia, China, India and Turkey, have dramatically increased their gold purchases, reflecting growing mistrust in the US dollar. This trend is further fuelled by the countries accelerating their efforts towards de-dollarization.”

“The importance of gold in foreign reserves is well recognised,” says Artigas, for “the role it plays as a long-term store of value, as a diversifier, its performance in times of crises, and the fact that it does not carry credit risk.

“In an environment of ever-increasing sovereign debt and geopolitical uncertainty, gold’s role is well cemented.”

Geopolitical uncertainty

Interest rates aside, other factors on the global stage are also driving the gold price. The yellow metal is considered a safe-haven asset, so investors often flock to it during periods of conflict in an attempt to escape market shocks.

“While the truce is holding in Gaza for now, tensions are still high in the Middle East and the war in Ukraine remains intractable,” says Streeter.

How has DeepSeek impacted the gold price?

On 27 January the stock market, particularly the Magnificent Seven, experienced a shock when DeepSeek, a Chinese generative AI start-up, announced that it could outperform OpenAI’s ChatGPT having spent less than $6 million on its final training run, and without relying on high-performance GPUs.

Investors fled the big tech stocks, in search of safer places to put their money.

“The gyrations on stock markets, caused by progress made by Chinese AI rival DeepSeek, which has potentially threatened the dominance of Silicon Valley, may also have helped gold’s glittering run upwards this week,” said Streeter, as gold approached its all-time high on 30 January.

Will gold continue to rally?

Experts predict that if the trio of low interest rates, a weak dollar and high demand from central banks continues, the gold price may well rise further - especially if geopolitical tensions also persist.

“Market consensus suggests that the Fed will deliver 100 basis points in cuts by year end, with inflation softening but still above target,” says Artigas. “The US dollar is expected to remain flat or slightly weaken as conditions normalise, while global growth remains positive but continues to grow below trend.

“In this context, the actions of the Fed and the direction of the US dollar will continue to be important drivers for gold.”

However, he adds that there are wider factors at play that influence the gold price, including economic expansion, risk, opportunity costs (particularly compared to bond investments), and momentum.

Factoring all these influences in, Artigas and the World Gold Council expect gold price performance in 2025 to be “rangebound, with slight upside”.

Other observers are less tentative in their bullishness. Goldman Sachs’ gold price outlook sees the yellow metal clearing the $3,000 mark by the end of 2025.

Similarly, Eric Strand, founder and CEO of AuAg Funds, said in the HANetf’s 2025 outlook that the inflationary cocktail will send the gold price above $3,000 during the year, and perhaps as high as $3,300.

Ways to get exposure to gold

There are three main ways to invest in gold. The first one is investing in the metal itself through a financial contract, such as an exchange-traded product. See our article on the best gold ETFs.

You can also get indirect exposure by investing in the miners that dig gold out of the ground. This can be done by investing directly in their shares, or by buying a gold fund or investment trust.

Lastly, you can buy physical gold bars or gold coins.

In terms of how much gold to hold in a portfolio, Tom Stevenson, investment director of personal investing at Fidelity International, suggests that around 5-10% is a good amount – which is about the same as you might hold in cash.

“The two offer insurance and dry powder to complement the growth and stability of the shares and bonds that make up the bulk of a balanced portfolio,” he comments.

Streeter cautions that, as with all investments, gold prices can go up as well as down.

While “often risen in times of economic or political crisis”, she says, “it has also a history of losing its lustre. After a strong run in the ‘70s and early ‘80s, it took over 23 years to get back to its 1983 high. Given the volatility associated with gold, it usually should only make up a small portion of a diversified investment portfolio.’’

Dan McEvoy
Senior Writer

Dan is an investment writer who spent five years writing for OPTO, an investment magazine focused on growth and technology stocks, ETFs and thematic investing.

Before becoming a writer, Dan spent six years working in talent acquisition in the tech sector, including for credit scoring start-up ClearScore where he first developed an interest in personal finance.

Dan studied Social Anthropology and Management at Sidney Sussex College and the Judge Business School, Cambridge University. Outside finance, he also enjoys travel writing, and has edited two published travel books

With contributions from