Record Highs

The precious metal reached a record high of $3,054 per ounce on Wednesday, March 19, 2025, after beginning its climb toward the $3,000 mark earlier in the week. By March 20, the price retreated from its all-time high to $3,033 due to profit-taking. Year-over-year, the spot price of gold has risen by 40%, while over a five-year period, it has increased by more than 80%.*

Chart 1: Gold spot price development over the last 5 years. (Source: Investing.com)*

A similar trend was observed in gold futures contracts for April 2025 delivery. These contracts surpassed their historic milestone on the morning of March 20, 2025, reaching over $3,064, before declining to $3,040 later in the day. Compared to the same period last year, contract prices have risen by 39%. Over the past five years, they have increased by 79%.*

Chart 2: Price development of gold future contracts with delivery in April 2025 over the last 5 years. (Source: Investing.com)*

Decision to Hold Interest Rates

A key factor influencing gold’s movement was the statement from the Federal Reserve chairman outlining the central bank’s future policy steps. After a two-day meeting on March 20, 2025, Chairman Jerome Powell highlighted rising inflation and a general economic slowdown. However, he also announced that the market should prepare for two rate cuts this year, totalling 50 basis points. Lower rates could continue to support gold’s rally. During the meeting, the Fed decided to keep rates unchanged at 4.25% – 4.5% until the next session. According to the CME Group’s FedWatch tool, there was a nearly 62% probability (as of March 20, 2025) that a rate cut could occur at the June meeting. Uncertainty surrounding inflation has been further fuelled by U.S. President Donald Trump’s trade policies. According to Investing.com, Trump has urged the Fed to lower interest rates due to his planned trade tariffs, which are generally considered inflationary.

Ceasefire Violations

Gold has also benefited from its safe-haven status amid geopolitical tensions in the Middle East and Europe, where ceasefire agreements have been violated. Fighting resumed in Palestine after Israel broke the January agreement. Hundreds of civilians, including Hamas leaders, were killed in the attack, prompting the terrorist group to respond with rocket strikes. In Europe, Russia broke a ceasefire agreement less than an hour after the Russian and U.S. presidents had agreed to the terms of a temporary 30-day truce. Additionally, the U.S. launched attacks on the Yemeni Houthi group, which initiated another offensive actions on maritime routes in the Red Sea.

Growth Outlook

Analysts anticipate continued growth in gold prices. The deVere Group forecasts that the price of gold could reach $3,300 by the end of the first half of 2025, citing political and geopolitical tensions along with economic slowdown as key drivers. Strategists at the Swiss bank UBS believe that the rally in gold will continue, as investors remain confident in the metal. Meanwhile, RBC Global Mining Equities has presented a more conservative outlook, expecting gold to surpass $3,100 by year-end. However, they believe that the $3,300 mark could be reached if the economy falls into a recession with significant monetary policy interventions. In the opposite scenario, RBC predicts a price decline to $2,700.

* Past performance is no guarantee of future results.