Experts predict a reliance on gold as a hedge against economic volatility but temper expectations for returns.
Let’s explore what to expect in the gold market and how investors can adjust their strategies for the year ahead.
Gold prices to benefit from falling interest rates and Central Bank activity
Kirtan Shah, Founder of Credence Wealth, expects gold prices to remain supported in 2025 due to a combination of falling interest rates and substantial buying by central banks.
“These factors will continue to support gold this year,” Shah notes.
While 2024 has been a standout year, Shah anticipates more moderate returns for 2025. He suggests a reasonable return expectation of 10-12% for gold investments.
However, Shah remains cautious about other commodities.
Their performance in 2025, he points out, will depend heavily on China’s economic policies and any major stimulus measures.
Recent efforts from China to stimulate its economy have had limited success, making other commodities less attractive for investment.
As a result, investor focus is expected to remain firmly on gold and silver, which continue to show resilience.
Geopolitical tensions and global economic trends favor gold
Mrin Agarwal, Financial Educator and Director of Finsafe India, stresses the impact of geopolitical tensions on gold’s performance.
“Geopolitical uncertainties continue to make gold a go-to safe-haven asset,” Agarwal explains. Central banks, especially in China and India, are expected to maintain their significant gold purchases, further supporting prices.
Agarwal also highlights the role of global monetary easing and robust individual demand, particularly from India, in driving gold and silver prices.
These factors are expected to remain crucial in 2025, solidifying gold’s place in investors’ portfolios as a reliable asset.
Strategic gold investments for 2025
Both Shah and Agarwal recommend that investors allocate 10-15% of their portfolios to gold and silver. Shah advocates for this range as a way to ensure stability while capitalizing on potential returns.
Gold, with its lower volatility compared to silver, is better suited for those seeking a more stable asset class for long-term growth.
Agarwal suggests that gold investments are best for medium to long-term goals. While short-term gains look promising, she advises investors to consider a minimum investment horizon of 4-5 years to avoid the volatility that often accompanies shorter time frames.
Although commodity-based mutual funds, especially those focused on gold and silver, have yielded strong returns—up to 19% in 2024—both experts express caution when it comes to multi-commodity funds.
Shah and Agarwal believe these funds might not perform as well in 2025, given the global complexities affecting various commodities.
