A golden era is dawning for the precious metals market. Analysts at UBS are particularly optimistic about gold. They forecast that gold prices are set to rise in 2025 on the back of two fundamental factors: the cycle of rate cuts by major central banks and simmering geopolitical risks. These circumstances will cement gold’s status as a safe-haven asset, fostering improvement in economic conditions anticipated for the coming year.

The first major driver of the precious metal’s uptrend is the prospect of lower interest rates—a stance shared by many global regulators. According to UBS forecasts, central banks worldwide are likely to adopt a more dovish monetary stance in response to inflationary pressure and slowing economic growth. Under such economic conditions, cash and bonds are losing their appeal, while gold is gaining investment shine.

The bank notes that lower returns in other asset classes will make investors allocate their capital to gold, boosting the value of the precious metal.

Apart from monetary policy, gold enjoys buoyant demand against the backdrop of ongoing geopolitical jitters. Tensions remain high in Eastern Europe and the Middle East, compounded by investor concerns over the ballooning US national debt. These factors enhance gold’s appeal as a reliable safe-haven asset capable of preserving capital during periods of market turbulence.

UBS currency strategists believe that gold’s investment luster will grow in the medium to long term. They also highlight broad structural trends that could support gold over an extended period. These include increased investments in transition metals for renewable energy projects and a shifting macroeconomic landscape influenced by deglobalization and demographic trends.