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Should gold investors buy or wait amid global uncertainty?
Most analysts project prices could climb as high as $4,500 per ounce by year-end
- PUBLISHED: Tue 22 Apr 2025, 8:10 PM
Gold prices have been rallying relentlessly, climbing 29 per cent this year to a record $3,500 per troy ounce on Tuesday, fuelled by fears of a global economic slowdown, renewed US tariff policies under President Donald Trump, and robust demand from central banks and investors.
While most analysts project prices could climb as high as $4,500 per ounce by year-end, with such a steep rally, investors face a critical question: Is now the time to buy, or should they wait for a potential correction?
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The sharp rise in gold prices reflects a confluence of macroeconomic and geopolitical factors. Goldman Sachs, a leading voice in financial markets, recently revised its 2025 year-end forecast to $3,700 per troy ounce, up from $3,300, with a range of $3,650 to $3,950. The bank cites stronger-than-expected demand from central banks and significant inflows into gold-based Exchange Traded Funds (ETFs). These inflows are driven by concerns over a potential global recession, exacerbated by Trump’s tariff policies, which threaten to disrupt trade and economic growth.
Citi Research echoes this bullish outlook, raising its three-month price target to $3,500 per ounce from $3,200. Analysts point to a “rare physical deficit” in gold, where demand outstrips supply, forcing prices higher to incentivise stockholders to sell. A key driver is China’s decision to allow 10 insurers to allocate up to 1.0 per cent of their assets to gold, potentially generating 255 tonnes of annual demand—equivalent to a quarter of global central bank purchases. This move underscores China’s growing role in the gold market, further tightening supply.
However, a bullion expert in Dubai said the rally’s intensity raises concerns about sustainability. “Gold’s 29 per cent gain this year has outpaced most other asset classes, prompting fears of a speculative bubble. Historical trends suggest that rapid price surges often precede corrections, as profit-taking or shifts in macroeconomic conditions—such as a stronger dollar or easing recession fears — could dampen demand,” said JK Bhaskar, a Dubai-based gold market analyst.
Ed Yardeni, president of Yardeni Research, offers an even bolder prediction, suggesting gold could hit $4,000 per ounce by the end of 2025 and climb to $5,000 in 2026. He attributes this to persistent global uncertainties and gold’s enduring appeal as a safe-haven asset.
The current rally is underpinned by both structural and cyclical factors. Central banks, particularly in emerging markets, have been stockpiling gold to diversify reserves amid volatile currencies and geopolitical tensions. Meanwhile, ETF inflows have surged as investors seek hedges against equity market weakness and tariff-induced trade disruptions. Goldman Sachs warns that a full-blown recession could push prices to $3,880 per ounce by year-end, driven by even heavier ETF buying.
For investors, the decision to buy gold at current levels hinges on their risk tolerance, investment horizon, and view of global economic trends.
According to precious metal experts, investors bullish on gold’s trajectory—particularly those anticipating a deeper economic downturn or escalating trade tensions—may see current prices as a stepping stone to higher levels. Goldman Sachs and Citi’s projections suggest further upside, with potential targets of $3,700 to $4,000 by year-end. Gold’s role as a hedge against inflation, currency depreciation, and market volatility remains compelling, especially if central banks continue easing monetary policy.
Long-term investors, such as those allocating to gold for portfolio diversification, may find entry at these levels justified, given forecasts of $4,500 or higher in 2026.
Cautious investors may prefer to wait for a pullback, given the rally’s parabolic nature. Gold’s rapid ascent increases the risk of a near-term correction, particularly if recession fears subside or if the U.S. dollar strengthens. Technical indicators, such as overbought conditions, could signal a pause, offering better entry points. However, waiting carries the risk of missing further gains if safe-haven demand persists or supply constraints intensify.
Financial advisers recommend a balanced approach. Allocating 5-10 per cent of a portfolio to gold can provide diversification without overexposure to price volatility. For those hesitant to buy at record highs, dollar-cost averaging — investing fixed amounts over time — can mitigate the risk of mistiming the market. Alternatively, investors could consider gold-related assets, such as ETFs or mining stocks, which may offer leverage to gold’s price movements but carry additional risks tied to market sentiment and operational factors.
The gold market is at a pivotal juncture, with bullish forecasts tempered by the risk of a near-term correction. While global uncertainties and physical supply constraints support higher prices, the pace of the rally warrants caution. Investors must weigh their confidence in gold’s safe-haven status against the possibility of a better entry point. As Ed Yardeni notes, “Gold thrives in chaos,” and with chaos aplenty — from tariffs to recession risks — the metal’s allure remains strong.
