Gold prices surge in 2025, high possibility of surpassing $3,600 by the end of this year

This year’s gold prices have risen significantly compared to last year. International gold prices have increased by approximately 27% since January, and compared to a year ago, they have jumped nearly 40%. In particular, domestic gold prices also rose from around 443,000 won per 3.75g of 1 don( in July 2023 to the 635,000 won range this year, recording a sharp increase of about 43%. This is seen as a continuous upward trend rather than a simple short-term fluctuation.

Experts Forecast Gold Prices to Remain Strong in 2025

Major analysis institutions in the financial industry expect gold prices to continue rising for the rest of this year. In particular, JP Morgan recently issued a report setting a year-end target of $3,675 per ounce, indicating room for further gains from the current price of around $3,300. The initial target of $3,000 set by Goldman Sachs and Citigroup has already been achieved. However, Barclays and Macquarie are more conservative, predicting a correction to around $2,500, but the likelihood of this scenario materializing is considered low given the current trend.

Four Key Factors Driving Gold Prices

Deepening De-dollarization Trend

Several countries are taking steps to reduce their dependence on the dollar in international trade. China is expanding currency swap agreements with trade partners to elevate the international status of the yuan, and India is also promoting the rupee as a reserve currency. Countries under US sanctions, such as Russia and Iran, are increasing their gold holdings as an alternative asset. These de-dollarization policies ultimately boost global demand for gold and drive up prices.

Expansion of Geopolitical Instability

Gold is the most sought-after safe-haven asset during times of high economic uncertainty. Ongoing major geopolitical risks such as US-China trade conflicts, the Russia-Ukraine war, and Middle Eastern disputes are increasing investor preference for gold. Similar to the patterns seen during the 2008 financial crisis or the COVID-19 pandemic in 2020, gold prices tend to surge during global economic crises.

Signs of Weakening Economies in Developed Countries

Concerns over inflation in the US and signs of economic slowdown in Europe are strengthening investors’ asset protection psychology. The role of gold as an inflation hedge and a safe asset during recession fears is being re-emphasized.

Expectations of Central Bank Rate Cuts

When interest rates fall, the opportunity cost of holding non-yielding gold decreases. Additionally, rate cuts are interpreted as signals of economic weakness, increasing demand for safe assets. As seen after the Fed’s 50bp rate cut in September last year, the surge in gold prices was driven by expectations of further rate reductions.

Domestic and International Gold Price Status

Currently, domestic gold prices are around 635,000 won per 1 don) according to Korea Gold Exchange, and international gold prices are about $3,300 per ounce based on USD(XAU/USD). Both markets experienced strong gains until May, but are now somewhat subdued, though no clear downward signals are observed. Compared to the same period in 2023, domestic prices have increased by nearly 50%.

Points to Watch When Investing

Some experts point out the possibility of price corrections in the second half of 2025. Therefore, proper risk management and position adjustment are essential when planning gold investments. It is important to monitor global interest rate policies, geopolitical developments, and dollar exchange rate trends to make cautious investment decisions.