Global Rate Easing Slows, 2025 Gold Price Trends Draw Attention
Although the global easing cycle is expected to continue until 2025, signals from the Federal Reserve to slow down rate cuts and geopolitical uncertainties are introducing new variables into global economic dynamics and gold price trends.
Federal Reserve's Monetary Policy Slows, Market Expectations Diverge
At its final policy meeting in December 2024, the Federal Reserve indicated that the number of rate cuts in 2025 would be reduced from the expected four times to two. This adjustment reflects the persistent resilience of the U.S. economy, particularly as it is expected to remain relatively healthy in the first half of 2025. Most banks and institutions have also adjusted their rate expectations downward.
Bank of America aligns with the Fed, expecting two rate cuts in 2025, while Wells Fargo is more conservative, anticipating only one cut. In contrast, TD Securities is more dovish on rates, forecasting four cuts in 2025, bringing the federal funds rate down to 3.50% by year-end.
BlackRock analysts believe that the U.S. economy remains a standout among developed markets globally, thanks to disruptive influences like artificial intelligence on economic cycles. BlackRock has greatly increased its holdings in U.S. stocks while reducing U.S. treasuries, anticipating that rates will stay above pre-pandemic levels, with bond yields likely to rise in the short term.
Trump's Policies Intensify Geoeconomic Uncertainty
President-elect Trump has already threatened to impose tariffs on major economies before taking office, a policy that might boost American manufacturing but could also cause sustained inflationary pressure and global economic instability. TD Securities expects these policy impacts to become apparent in the third quarter of 2025, affecting global growth and market confidence profoundly.
Analysts indicate that Trump's policies will further drive the "de-dollarization" trend, especially against a backdrop of massive gold purchases by emerging market central banks, with the correlation between gold and the dollar and bond yields already breaking down.
Gold Price Outlook: A Mix of Volatility and Opportunity
While the Fed's slower pace of rate cuts may exert short-term pressure on gold, analysts remain optimistic about its long-term trajectory. Bank of America predicts that with constant gold purchases by central banks, gold prices could surpass $3,000 per ounce.
Additionally, the unpredictability of Trump's policies, expectations of global economic instability, and ongoing geopolitical tensions will support gold prices. Commodity analysts note that while changes in interest rate expectations may impact short-term gold demand, gold's allure as a safe-haven asset remains strong in the long term.
Global Economic Outlook and Investment Strategy
Looking ahead to 2025, global economic uncertainty and political risks will continue to challenge investors' responsiveness. Analysts recommend that investors closely monitor Federal Reserve monetary policy dynamics and the concrete implementation of Trump’s policies, particularly as geopolitical tensions may escalate.
Gold's value as a hedge will be highlighted in this complex environment, becoming an important choice for investors to mitigate uncertainty.
