Gold prices had an exceptional run in 2024, outperforming the S&P 500. U.S. Money Reserve President Philip N. Diehl has recently assessed what he sees as the main factors fueling the increase, reaching the conclusion that some of those factors may intensify in 2025. The result, he projects, could be a further boost in gold’s price per ounce.
A boost would add to what has been a stellar couple of years for gold owners. Prices began hitting new records in October 2023, and the 26% gain in gold prices in 2024 represents both the largest increase since 2010 and one of the biggest this century. Diehl, who served as the 35th Director of the U.S. Mint, says in a recent video posted to the U.S. Money Reserve YouTube channel that he expects the rising gold price trend to continue.
U.S. Money Reserve is a leading distributor of government-issued precious metals. The company specializes in helping clients diversify their portfolios through the acquisition of high-quality gold and other metals, including silver, platinum, and palladium.
In the video, Diehl says he carefully assessed the ongoing forces behind gold’s record price increase. “I don’t have a crystal ball,” he says. “I make my call based on an assessment of the forces that determine prices in the 21st century. Other analysts say they do something similar, but many don’t. They still assess gold’s prospects through their 20th-century lens, or they subscribe to outdated conventional wisdom. Or they infuse their opinions with political biases. I avoid these traps.”
Diehl says he believes gold will exceed $3,000 an ounce by the end of 2025. He also addresses what he considers the most important factors that will drive that boost in price.
A “Perfect Storm” of Forces Is Driving Gold’s Expected Price Increase
Diehl says that the “perfect storm” of forces that drove gold’s price higher in 2024 could have the same impact in 2025. “In fact, these forces may intensify in the coming year,” Diehl says.
One of these forces is the purchasing of gold by central banks. The People’s Bank of China led this trend in 2024, escalating gold purchases through May, then resuming in November. It’s something Diehl expects to continue as China “marshals its resources for a confrontation with the West.”
In December alone, the central bank reported a 10-metric-ton gold purchase. China’s gold holdings have now reached 2,280 metric tons, or about 5.5% of total foreign gold reserves. That’s a record high.
Diehl says he expects central bank purchases of gold to be strong in other countries in the upcoming year as well.
Retail purchasing of gold in Asia is another factor in rising gold prices. As the Chinese economy has struggled in recent years, the nation’s citizens have purchased gold “hand over fist” to protect their wealth, Diehl says. He expects that trend to resume in 2025.
He also anticipates consumer demand for gold in India to surpass demand in 2024. Diehl notes that while many analysts overlook consumer demand, China and India are the world’s top consumer gold markets. “Together, they represent two thirds of the global retail market,” Diehl says.
The Effects of War and Instability Are Expected to Continue in 2025
Geopolitics and war are other factors impacting gold’s price. “Wars and rumors of wars have been a driver of gold prices from time immemorial,” Diehl points out. With tensions rising in hot spots around the world, including the continuing war in Ukraine and ongoing tensions in Gaza, he sees no easing of this concern in 2025.
Economic uncertainty can also drive gold’s price higher. Diehl expresses concern that Americans are entering 2025 with a “false sense of economic security.” He says the strong economy that continued through the fourth quarter of 2024 “seems unlikely to last.”
Diehl says many businesses and consumers may have accelerated purchases in the last part of 2024 in anticipation of President Donald Trump’s tariffs in 2025, which likely will mean a reduction in demand in the first half of the year.
This also plays a role in political instability, another factor listed by Diehl. History has shown that autocratic leaders often engage in military conflicts when faced with difficult economic times. Diehl says that with worsening economies in places such as Russia and Iran, he expects some leaders will “intensify regional military conflicts.”
Political instability is also an issue to some degree in many other countries, including Germany, France, Israel, Spain, Poland, South Korea, and even the United States. “I expect geopolitical tensions to rise, further fueling gold prices this year,” Diehl says.
Interest Rates and Using Gold as a Safe Haven in Turbulent Times
Diehl lists interest rates as a final factor. He expects rates to stay the same. The Federal Reserve left its key lending rate unchanged in January, and officials have since hinted that there may be no cuts until they can deal with a recent inflationary spike and take stock of the overall impact of Trump’s trade policies.
Diehl says that rates may remain unchanged because of the unknown impact of those policies, as well as the details of the President’s tax plan, expected to be considered by the U.S. Congress later this year.
In addition, about $3 trillion in U.S. debt is expected to mature in 2025, meaning it must be refinanced at a higher rate in a market already saturated with corporate, government, and sovereign debt issues, Diehl says.
With so many factors in play, some will turn to gold as a tool to diversify their holdings, because the metal’s price behaves differently from prices of paper-based assets like stocks and bonds. Gold tends to retain its value over time, even when inflation erodes the purchasing power of cash.
During economic downturns or financial crises, gold offers a financial hedge, stabilizing a portfolio when other assets lose value. Gold is also highly liquid, with an intrinsic value that is universally recognized.
Given the factors currently in play, Diehl says he predicts gold will continue rising in price as it did in 2024. He urges people to “protect your wealth and tap into the extraordinary appreciation opportunity gold offers buyers today.”
