Analyst revamps gold and silver outlook ahead of 2025

Bob Marley said wisdom was better than silver and gold, but it wouldn’t hurt to stock up on all three.

People have been trading in silver and gold for thousands of years.

Historical Context of Precious Metals

The Egyptians began producing gold-bearing shekels around 1500 B.C., silver coins started showing up roughly 700 years later, and we’re still buying the stuff to this day. That’s some serious staying power.

Morgan Stanley Wealth Management said that gold and silver could provide a hedge for an investor’s portfolio in economic or market downturns and during periods of rising inflation.

Demand for silver tends to grow when economies take off, but silver can be more volatile than gold, the firm said. Gold can be a more powerful diversifier than silver and is less affected by economic declines.

Half of all silver is used in heavy industry and high technology, including smartphones, tablets, automobile electrical systems, solar-panel cells and many other products and applications. This broad usage makes silver more sensitive to economic changes than gold, which has limited uses beyond jewelry and investment.

Both precious metals had a good run in 2024.

A year ago, gold was trading at about $2,022 an ounce. At last check, that price had climbed 27% to $2,631.90.

Silver sold for $24.09 an ounce at the end of 2023, and is currently priced at $29.968. That’s up 24% on the year.

Market Predictions and Economic Analysis

Gold is forecast to climb higher than expected as central banks in emerging markets have ramped up purchases, Goldman Sachs said. Gold usually trades closely in line with interest rates. As an asset that doesn’t offer yield, it typically becomes less attractive to investors when interest rates are higher and is usually more desirable when rates fall.

While that relationship still holds, central bank purchases have been a powerful force, resetting the level of gold prices higher since 2022, Goldman Sachs said. Goldman Sachs predicts gold will rise to $3,000 an ounce by end-2025.

Michael Hsueh, research analyst for Deutsche Bank, said in a report last month that “the structural bull case for gold remains persuasive.” “First and foremost, a larger share of demand is now represented by central banks,” he said. “China’s share of central bank demand rose to 48% since 2022 from 11% previously, according to IMF data. This is marginalizing more price-sensitive jewelry consumption.”

Except for the pandemic-constrained 2020, Hsueh said, this year’s global jewelry demand may be the lowest since 1989. Deutsche Bank is forecasting an average gold price of $2,725 an ounce in 2025, with a range of $2,450 to $3,050 an ounce.

As for silver, Maria Smirnova, managing partner with the Toronto asset manager firm Sprott, said that several key factors have bolstered the glittery substance this year, including strong industrial demand in the face of persistent supply deficits and increased investment interest amid economic uncertainty.

Smirnova said that the silver market was relatively small compared to other commodities like copper and gold, which makes it inherently more volatile, with even minor shifts in supply or demand having an outsized impact on its price.

“Silver supply has faced challenges over the past decade, remaining largely stagnant even as demand has steadily risen,” she said. “The global silver supply has not significantly increased since 2014, leading to a supply deficit.” The Silver Institute projects a 1% decline in supply in 2024, emphasizing that without new mine discoveries or expansions, silver production may struggle to meet growing demand, Smirnova added.

Maleeha Bengali, CEO of MB Commodities Capital, sees gold and silver prices climbing next year. Bengali, who has worked as a portfolio manager and hedge fund manager for UBS, Goldman Sachs and Merrill Lynch, said that “2025 will see a very delicate balancing act between higher growth, lower fiscal spending and deficits, and contained inflation.”

“This is a rather tall order, as it assumes that everything will go superbly well such that the economy can keep humming along without any risks to inflation or growth,” she said. “If history is any guide, we know that is never the case.”

“We all know the U.S. debt is on an unsustainable fiscal path; over the last 100 days we have added yet another $1 trillion to the total figure and there is no stopping that for now,” she added.

She noted that each dollar printed is giving back a lot less than before, which is essentially the story of how fiat currencies are debased and why investors need to think about owning hard assets.

Silver has lost 10% since Trump won the U.S. presidential election with talk of austerity cuts and more trade tariffs taking the dollar sharply higher, she said. It has lagged gold and bitcoin, which has more than doubled year-to-date. Those are the other two bellwethers for protecting against fiat currency debasement, Bengali said.

“The domestic consumer needs help and so do small- to medium-sized businesses,” she said. “Today, the U.S. economy is showing robust growth but at the cost of higher inflation.”

Bengali said that getting the engine moving again might come at the expense of inflation and more money printing.

“The U.S. economy is like an opioid addict that needs a constant fix, and next year, with all of its challenges, it will be no different,” she said.

“When that happens, hard assets like gold and silver benefit greatly as they are the only true store of value and inflation hedges where see upside of 15% and 30%, respectively,” Bengali added.