Gold in 2025 - Is it a good investment or not? What investors need to know

Economic uncertainty and global conflict situations have made gold the main choice for investors in 2024, especially when prices dropped to a record high of $2,790 per ounce. It is essential to understand the driving factors and correct investment strategies to achieve good returns.

Key Factors Driving Current Gold Prices

Global Tensions and Safe-Haven Demand

The conflicts in Ukraine and the Middle East are creating continuous buying pressure. Investors are turning to gold to avoid risks. Additionally, the uncertainty from the US presidential election earlier has added further upward momentum to gold.

Central Banks Accelerate Gold Accumulation

In the first quarter of 2024, net purchases reached 290 tons, which is 36% above the long-term average. China, India, and Turkey are the major buyers, with China increasing holdings from 1,900 tons to over 2,500 tons, reflecting efforts to reduce dependence on the US dollar. India aims to raise its gold reserve ratio from 7% to 10% by 2025.

Interest Rate Policies and Macroeconomic Factors

It is expected that the Fed will cut interest rates in 2025, reducing the opportunity cost of holding gold. When interest rates are low, gold becomes more attractive. The decline in interest rates also weakens the dollar, which is an additional positive factor.

Furthermore, long-term inflation concerns and the US budget deficit lead investors to view gold as a hedge.

Perspectives from Leading Financial Institutions

Goldman Sachs has raised its 2024 gold price target to $2,700 per ounce, citing strong demand from central banks and heightened geopolitical risks.

J.P. Morgan, while cautious, remains optimistic, emphasizing that declining interest rates and robust demand will support prices.

FX Empire has the most bullish outlook, suggesting that if conflicts escalate or a recession occurs, gold could reach $3,000 per ounce in 2024.

Morgan Stanley and UBS forecast prices reaching $2,800 per ounce, though UBS notes that the rapid gains may lead to short-term consolidation.

Technical Analysis Signals

Gold prices remain above a key support level at $2,447 per ounce, ( the 200-day moving average ), which indicates a continued bullish trend. The RSI index has pulled back from overbought levels, suggesting room for further upside.

The MACD is approaching the Zero Line; crossing above it would confirm a medium-term uptrend. Increased trading volume during upward movements indicates investor confidence.

Suitable Investment Strategies

Balanced Portfolio Allocation

Experts recommend allocating about 5-10% of your portfolio to gold. For example, if you have an investment of 1 million baht, invest 50,000-100,000 baht. Avoid exceeding 15-20% to maintain balance and diversify risk.

Holding Period Considerations

For long-term investments (3-5 years), gold helps diversify risk as it moves inversely to stocks. For short-term (6 months-1 year), be cautious of volatility and plan entry and exit points clearly.

Optimal Entry Points

When prices pull back near $2,447 per ounce, it presents a good entry opportunity. If prices fall below $2,500, consider gradually buying in parts—divide your funds into 4-6 portions and buy on dips rather than investing all at once.

Risk Management

Although gold is a safe asset, it still carries risks. It could decline by 10-15% during volatility or 20-25% in severe crises. If investing 100,000 baht, be prepared for the value to drop to 75,000-90,000 baht in the short term.

Brief Summary

Investing in gold is worthwhile if used as part of a long-term strategy to diversify risk. However, assess your risk tolerance carefully and avoid investing with funds needed for short-term use. Supporting factors such as central bank demand, low interest rate policies, and geopolitical risks suggest that gold still has a positive outlook heading toward 2025.