Gold in 2025: Where Could it Be Headed and Why?

What might we see from Gold in 2025? And what will they mean for gold mining and exploration companies on the ASX?

Gold has climbed over 30% so far in 2024, and up 70% since September 2022.

Gold price, log scale (Source: TradingView)

But, with inflation waning, there is argument to be made that prices may moderate in the new year. That’s not what analysts are thinking.

Why watch gold prices

First of all, you may be wondering why you should even care if you don’t invest in gold stocks. This is because gold is commonly perceived as a safe haven asset and thus as a measure of investor optimism or pessimism. It is commonly viewed as a hedge against inflation, and with inflation at 40 year highs – that is just what the doctor ordered.

Of course, the movement of gold prices isn’t always in an upwards direction and investors should acknowledge this. Moreover, not all companies do well – some companies just fail to find the precious metal in their exploration endeavours, some can but cannot get the cash to bring it into production. And even established miners can have issues like supply chain issues and weather disruptions.

Above all else, even when gold is well, it may not be the best commodity to invest in at a particular point in time. Even Goldman Sachs, one of the more bullish entities on precious metals, thinks copper and aluminium are better bets. Nonetheless…

Gold in 2025: $3,000/oz?

…analysts are predicting a good year in 2025 – specifically for >US$3,000/oz. Goldman is one of them. Undeterred by a brief retreat post-Trump’s win, Goldman believes gold will benefit from growing demand from central banks and an expected boost on ETF holdings as the US federal reserve cuts rates.

So should I buy gold stocks?

Potentially, but not just any gold stock, and you shouldn’t discount options such as investing in physical gold (yes, we mean buying physical bars and holding them with the intention of trading them in for cash at a later date) or in gold ETFs.

By investing in an ETF, you are essentially buying a basket of stocks, which helps spread out your risk. This means that if one stock within the fund performs poorly, it may be offset by the performance of other stocks in the fund. And there are ETFs on the ASX exclusively investing in gold stocks.

What to look for

If you want to buy gold stocks, our recommendation is to look at developers close to production like De Grey (ASX:DEG), or established producers that are about to go to the next level like Capricorn Metals (ASX:CMM). We think the risk-reward balance is most appropriate at these levels.

Buy an established company like Northern Star (ASX:NST) or Newmont and there’s little risk, but little potential for reward unless you hold for many years. And if you buy a small cap explorer, there is a lot of upside potential, but a lot of risk. Maybe though, you could consider investing in small cap explorers if they only account for a small proportion of your portfolio and don’t invest any more than you are willing to lose. All of these companies can have short-term fluctuations due to gold prices, but a good project will find money at any price, and an explorer that has pegged dirt in the wrong location won’t find gold just because prices are high enough

Whatever company you choose, be sure to complete due diligence on the company’s financials (particularly the cash flow statement), the management team, the track record of the company and the jurisdiction. The events to have occurred at Resolute Mining (ASX:RSG) have shown investors need to be careful about the latter.

Conclusion

Gold is not the only investment option, but it may be one of the more appealing given the positive tailwinds facing gold prices in 2025. But, as always, investors need to due their due diligence on specific opportunities in the sector, based on their risk tolerance and their own due diligence on those opportunities.

What are the Best ASX Stocks to invest in right now?

Check our buy/sell tips