The most frequently asked question in precious metals markets is “Where is the gold price going?” It’s a question I get from customers, reporters, friends, and even colleagues. This question has been asked hundreds of times over the course of my career.
I wanted to collect my thoughts on the topic in one place. Of course, no one is perfect here. I will include my research and reasoning to back up my gold price forecasts.
Forecast of Gold Price for 2022: $1,850 per troy ounce
Forecast of Gold Price for 2023: $2,100 per troy ounce
Forecast of Gold Price for 2025: $2,000 per troy ounce
Forecast of Gold Price for 2030: $3,000 per troy ounce
The Gold Price History may not repeat–but it will rhyme
The cyclical nature of the gold market is one of its most essential characteristics. This means that it follows cycles. This holds true for all commodities, and indeed for the entire economy.
This allows us to make important assumptions about the future direction of the gold price. Gold was in a prolonged bull market from the late 1990s to the beginning of the 21st Century. In the wake of the 2011 global financial crisis, gold prices rose to $1,900/oz from $300 per troy ounce.
The bear market that followed was over seven years long. During the bearish period, gold prices fell by 35% in U.S. Dollars.
In 2019, the trend direction changed from bearish to bullish. We are currently experiencing a pullback, sometimes called a correction, within a larger bull market phase. The cyclical nature of the markets makes it likely that the upward trend in gold prices will continue for many more years.
The 20-year price trend below may show this longer-term trend even more clearly.
Gold Price Prediction for 2022
The volatility of the gold market in 2022 has been high. Gold prices rose to $2,000 an ounce in the early part of the year, but it also saw a few sell-offs this summer.
The summer months can be very weak for gold prices. It is sometimes called the “summer doldrums” by investors. The winter months of December through February are the strongest for gold prices most years. The reverse is true in the summer. For the first time in many years, gold traded at $1,680/oz.
Gold prices have struggled despite normal seasonality. This is due to a significant policy change by the Federal Reserve, which is the central bank of the United States. The real interest is one of the strongest correlations between gold and the Fed’s nominal interest rate, which is less than the inflation rate.
Real rates can be high so owning gold is less appealing than holding yield-bearing assets such as bonds. Inflation near 10% has pushed real rates to negative territory in the past year. Overall created a favorable environment for gold assets.
In order to fight inflation, the Fed seems determined to keep raising interest rates. The result is that the gold price will be under some pressure. To pull real interest rates from the negative, however, will require a higher federal funds rate. Until that happens, I expect gold prices to remain in the $1,700-1,800 range. There’s a good possibility that gold prices will rise by the end of this year. My target price for gold at year-end will be $1,850 per troy.
Gold Price Prediction for 2023
The macroeconomic outlook for next year doesn’t offer any insight into how high gold could climb. According to the Federal Reserve Open Market Committee (FOMC), interest rates should be neutral in relation to inflation sometime between 2023 and 2024. This means that interest rates will be normalized closer to the 2% mark.
The markets are expecting the Fed and other central banks around the world to shift at that point towards a more dovish policy. This would increase the potential for gold prices to rise.
In addition to the anticipated “pivot”, there are other realities that will undoubtedly lead to higher gold prices. Global economic activity could be heading for a recession in 2023. In times of slow economic activity, gold usually performs well.
Geopolitical strife will likely be more severe than it is now, considering developments in Ukraine, Taiwan, and other countries. Apart from interest-rate policies, the main driver for large institutions and investors to purchase gold as a safe haven is escalating geopolitical tensions.
These two factors are expected to push gold prices higher than their current highs, with my 2023-year-end target of $2,100 per troy, ounce.
Gold Price Prediction for 2025
This is where I see the situation getting more complicated as we look three years into the future using our gold price forecast. By 2025, the underlying economy will likely be in transition. It is impossible to predict what the Federal Reserve will do by then.
This time, we may see renewed investor interest in U.S. stock markets. Most economists predict that the global economy will return to modest growth in the middle of the decade, barring any major conflict or war. This baseline scenario would see the gold price fall from its highs due to greater risk appetite.
However, this doesn’t necessarily mean that gold prices will crash. I expect gold to retrace its recent highs of $2,000 per troy ounce by 2025 with some room for maneuvering in either direction.
Gold Price Prediction for 2030
The longer-term shines gold the most. This is why investors and institutions invest in gold. The greatest benefit of gold is its ability to preserve long-term wealth.
We will likely be entering another bull phase in the gold market by the end of the next decade. It is unlikely that gold will move in a straight line to higher prices. This is the case for virtually every asset class.
It is difficult to forecast economic conditions in the long term. In the 2030s, the investing landscape will be very different than in the current decade. While many financial advisors and academics prefer to refer to economics as a hard science or a method of studying human behavior and trends in the economy, it is actually more accurate to describe it as an approach to observing and describing human behavior. All economic activity is social interaction.
Let’s get back to the notion of cyclicality within the gold market and future patterns that rhyme with past history. Most likely, gold will continue on the same path as its previous major cycles. A major sell-off at all-time highs is followed by a period of 5-year to 7-year stagnation. The last leg of this pattern is a rally to new highs.
It’s difficult to predict the future eight years in advance. We can’t even know when they will be effective. However, if I draw the picture in broad strokes, I believe that gold should trend higher towards $3,000 per troy ounce by 2030, as inflation slowly reduces the purchasing power of all fiat currencies (yes even the U.S. Dollar).
My Gold Price Forecast Methodology
To make my predictions regarding the gold price, I combine technical analysis with observing market fundamentals. Contrary to strict chart technicians, my evaluation of the gold market includes looking at the wider scope. This includes considering monetary dynamics and economic fundamentals.
As an example, I look out for fluctuations in the U.S. currency supply (a measure the government calls M2) to see if this is a sign of where gold might be heading. The federal government quickly increased the money supply in Spring 2020 with trillions in stimulus payments, early in the covid-19 epidemic. It takes around 18 months for economic changes to take effect. This is what we are seeing with inflation this year.
Major Drivers for the Gold Price
As I have mentioned, I believe that geopolitics and monetary policy will have the biggest impact on the gold market.
The first example shows that central banks all over the globe are raising interest rates. This was the first time that the Federal Reserve led the charge, and nearly all its counterparts around the globe have followed their lead. An environment with rising interest rates is not good for gold, all else being equal. This rate-hike cycle is aggressive, but it does allow for the possibility of a jarring policy change in the event that there is an economic downturn. If there is uncertainty about the future interest rate levels, gold should be bought up to protect yourself.
Participants in the gold market should also be focusing on geopolitics. Tensions between the East and West (primarily North America, Europe, and Europe) have been growing in recent years, particularly since the pandemic started in 2020. These changes can have a significant effect on the economic trends as well as wider commodity cycles, which were discussed earlier.
The most concerning is the ongoing trade war between the United States of America and China. Both Washington and Beijing are driving up the costs of key resources by imposing retaliatory duties on their exports. The trade war is quietly a major factor in the high inflation that the supply side has seen, even though it is often overlooked in the media.
The immediate negative effects of trade tensions have elicited a small response from the gold market. The dispute will continue to impede the functioning of the global financial system, and the longer it goes unresolved the greater the risk. This seismic shift in global order wouldn’t happen overnight. However, there is a clear link between the stability or lack of the neoliberal economic order and the demand for gold as a means of wealth preservation.
This information is provided solely for educational purposes. Forward-looking statements regarding the gold price forecast should be viewed as educational information only. Do your research. For more information on investing, consult a professional financial advisor.