E-Paper
Sign In
Sat, Nov 08, 2025 | Jumada al-Awwal 17, 1447 | Fajr 05:11 | DXB 
29°C
iPhone | iPad
Android
Gold has leaped 50% in a year, but can it go even higher?
Investor demand signals a strong 2025 for the precious metal; however, some strategists are becoming cautious due to the speed of the gains and bullish attitude surrounding the metal
- By:
- Patti Domm
The US Federal Reserve is expected to cut interest rates again this month, a move that is likely to continue weakening the dollar, and could prove positive for gold. Gold has been on a phenomenal run, gaining more than 50 per cent in the past year, hence many investors wonder what can propel it even further. Lower interest rates are one factor that should support it, along with strong demand from central banks and investors.
The Federal Reserve trimmed its benchmark fed funds rate by a quarter of a percentage point in September and is widely expected to cut it again on October 29 after weak jobs data in the US. "It doesn’t seem the gold market is fully pricing in the cut,” said Suki Cooper, head of global commodities research at Standard Chartered. This means there could be more buying in the near term. Yet, gold’s rapid run has taken it close to many strategists’ targets, and some say the yellow metal’s prices are ripe for a pullback. She added that the latest move higher in gold prices has been in part driven by investors buying exchange traded funds (ETF).
Recommended For You
Stay up to date with the latest news. Follow KT on WhatsApp Channels.
Goldman Sachs, in fact, boosted its price forecast Monday, in part because it expects ETF buying to continue alongside central bank buying. Goldman strategists now see gold reaching $4,900 (Dh18,000) per troy ounce by the end of next year, up from a previous target of $4,300 (Dh15,792). Wells Fargo also recently raised its 2026 forecast range from $3,900 (Dh14,322) to $4,100 (Dh15,057) an ounce and lowered its outlook for the dollar.
Why the recent gold surge?
Uncertainty has been a key driver of gold prices. US tariff policy shook up markets globally in the spring, but now that there have been negotiations and agreements between the US and many countries, some of the concerns about the economy and inflationary impact have subsided. “As rates come down, a falling rate environment is supportive of gold. But my view is a lower rate environment doesn’t really explain the price. It really comes down to an uncertainty premium,” said Chris Louney, commodities strategist at RBC Capital Markets.
I think interest rates and the dollar have a chance to rally…and that should be a catalyst as to why gold sells off.
Mark Newton
He cited growing debt in the US and elsewhere, the US government shutdown, geopolitical risk and softening interest in US assets. Strategists say concerns about the independence of the Federal Reserve also drove gold buying and triggered selling of dollars. US President Donald Trump soothed some concerns when he said he would not fire Fed Chairman Jerome Powell. However, he has been highly critical of the Fed’s interest rate policy and is attempting to oust Fed Governor Lisa Cook. Lower interest rates would make it cheaper for the US to pay for its debt. “There’s potential for higher gold prices. There’s upside risk to it when we look out to 2026,” Louney said.
As the price continues to rise, some strategists are becoming cautious due to the speed of the gains and bullish attitude surrounding the metal. Fundstrat’s Mark Newton said gold prices are “stretched” and sentiment is too frothy. He expects a sell off within the next four to six weeks. He recently attended the CMT Global Investment Summit in Dubai.
Will gold prices go higher?
“One of the few themes that everyone is talking about is how bullish gold is from a technical and fundamental perspective. That’s scary to me, as no one was discussing this when gold bottomed three years ago in 2022,” said Newton, who heads global technical strategy.
Newton notes gold has not suffered any significant decline this year, and he expects a pullback in the next four to six weeks. “I don’t immediately want to buy the first dip. I think interest rates and the dollar have a chance to rally…and that should be a catalyst as to why gold sells off. The world is starting to see fiscal uncertainty and rates are going to eventually turn back higher. That could be the reason gold sells off,” Newton said, adding that he would reassess his target after a sell-off. “I like the attractiveness long-term.”
Cooper said the gold price will be influenced by competing factors into the year end, and she expects a correction. “This is difficult because historically we tend to look through when the physical market will come in as a buyer, or we can look at technical levels which suggest the market is overbought,” she said. One level of technical support on the downside would be $3,650 (Dh13,405), she noted.
The Indian wedding season from October through December is an important time for physical gold purchases as well. But Cooper believes there also could have been plenty of buying by jewellers when prices were lower in the summer months, and there currently does not seem to be a lot of Chinese buying after a strong start to the year.
She expects gold prices to average $3,875 (Dh14,231) per troy ounce next year. Standard Chartered is not forecasting further Federal Reserve rate cuts after two more this year though the U. fed funds futures market is pricing in further cuts. Under the Standard Chartered scenario, the dollar could stabilise and the appeal of gold will not be quite as glittery.
Even as equities have rallied, you’ve seen allocations to gold. That’s a sign these people are cognizant of these broader risks out there.”
Rbc Capital Markets' Chris Louney
Some investment advisers believe gold holdings should amount to about 10 per cent of a portfolio though their advice varies. Gold is viewed as a hedge against risks, and it is expected to smooth out the volatility in holdings such as equities.
Some institutional portfolios traditionally have held less than five per cent of their assets in gold, but they may have a higher percentage now as the price has climbed. “I suspect five per cent is not a ceiling, people are willing to let their gold allocations run higher,” said Louney.
Cues from central bankers
Investors in the last several years have been taking their cues from the world’s central bankers.
Central banks have acquired over 1,000 tonnes of gold in each of the last three years, double the 400 to 500 tonnes they averaged per year over the preceding decade, according to the World Gold Council. RBC expects central banks will buy 850 tonnes this year.
“Gold is a perceived safe haven …(central bank) purchases are still quite strong and for similar reasons, you’re still seeing investor allocations into gold.” Louney said. “Even as equities have rallied, you’ve seen allocations to gold. That’s a sign these people are cognizant of these broader risks out there.”
Different ways to buy gold
Investors can buy gold in different ways, and there are advantages to each. A very simple way to quickly gain exposure is to buy an exchange traded fund or equity. “If you’re buying just a gold mining company or a gold ETF, you’re just buying a claim on gold,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. For many investors, “that might be good enough.”
Others see more security in holding the physical metal, but that can also have its downside. “If they’re buying bullion, it’s expensive because you need to store it some place and insure it. For an instrument that does not get a yield, that’s more money coming out of your pocket to hold onto gold,” said Chandler.
Gold remains highly desirable and even if it sells off, central banks will continue to buy. “Gold is the new cool kid when it comes to a reserve asset,” said Peter Boockvar, chief investment officer at One Point BFG Wealth Partners. He said investors globally have been diversifying away from dollars. “Gold is taking that market share from sovereign bonds."
Don’t just scroll. Know it all. Sign up for your daily UAE news fix.
Get the top stories of the day right in your inbox.
