As the world navigates through a complex economic landscape, the allure of precious metals is set to grow significantly from now until 2025, according to the latest monthly report by MetalsFocusThis forecast hinges on a blend of factors, positioning investors toward an increased interest in gold and silverThe analysts at MetalsFocus have retained their price predictions for precious metals, anticipating that gold prices will reach new historical highs in the upcoming months, subsequently elevating silver prices as well.

The macroeconomic picture is characterized by a surge in various asset classes fueled by expectations of tax cuts and regulatory rollbacks, particularly in the United StatesThe stock market has responded robustly, with major indices hitting all-time highs in early DecemberHowever, adding complexity to the situation is the expectation of potential tariff hikes during the next presidential term, posing a risk of rising inflation

As a direct reaction, both the dollar and U.STreasury yields spiked sharply, leading to a major shift in market sentiment regarding interest rate trajectories for 2025. Back in September, projections suggested that rates could dip as low as 2.8% by year-end 2025, but current futures in federal funds rate indicate a climb to approximately 3.7%, surpassing the Federal Open Market Committee’s range of 3.1%-3.6% set earlier this year.

Amid these fluctuations, the strengthening dollar reflects the challenges faced by other leading reserve currenciesNotably, political turbulence in Germany and France continues to weigh down on the euro, with a deadlock in France over budget proposals leading the country’s bond yields to rise above those of Greece for the first time.

The sharp rise in the dollar and U.STreasury yields has triggered a sell-off in precious metalsIn November's first half, the price of gold saw a notable drop of 9%, while the performance of white metals mirrored this volatility, with even greater declines

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Looking ahead, expectations of interest rate cuts in 2025 should theoretically carry bond yields lowerNevertheless, current market prices for precious metals already account for a significant slowdown in anticipated rate cuts for that year, meaning any caution from the Federal Reserve in easing rates may have a limited impact moving forward.

Examining the gold market specifically, following the historic peak of $2,790 per ounce at the end of October, gold prices plummeted sharply due to surges in the dollar and Treasury yields, eventually touching a two-month low of $2,537 by November 14, after a total decline of $250. In the wake of escalating tensions, gold prices rebounded over the $2,700 threshold briefly, only to see declines once again following a ceasefire agreement between Israel and LebanonAs of the time of writing, gold remains caught in a range between $2,600 to $2,650 per ounce.

Despite the short-term pressures, the resilience of gold has been noteworthy, maintaining robust support levels near $2,600 per ounce, higher than the beginning of the year by 26%. This strength reflects the myriad of uncertain economic and political factors that continue to offer investors substantial reasons to retain gold as a reliable diversification tool within their investment portfolios.

Recent decreases in gold prices can possibly be attributed to tactical investors liquidating long positions rather than a serious shift in market sentiment towards gold

Meanwhile, interest in shorting gold remains low, as some short-position holders have taken advantage of price dips to cover their positionsSimultaneously, net purchases by global official sectors for gold maintain high levelsNotably, countries such as India, Turkey, and Poland—known for their consistent buying patterns—have continued to bolster their gold reserves even as prices reached historic highs.

Looking ahead, MetalsFocus maintains its previous forecast, suggesting that while gold prices could face downward pressure in the short term, the overarching trend of declining interest rates in the U.Swill persist, benefiting gold in the long runThe combination of lower rates and heightened geopolitical conflict will continue to support gold investments amid fears over escalating U.Sdebt levels, increasing political instability in Europe, and ongoing trade war threats.

Nonetheless, MetalsFocus anticipates that starting from the second quarter of 2025, gold prices are likely to experience pullbacks, as most positive factors would have already been factored into current prices

However, they still expect gold to sustain relatively high levels leading up to the end of the year.

As the market develops a clearer understanding of U.Seconomic policies, concerns over escalating U.Sdebt levels may intensifyIn Europe, continued political uncertainty in France and Germany looms in the coming monthsWhile a recent ceasefire agreement between Israel and Hezbollah offers a short respite, geopolitical tensions are unlikely to dissipate swiftly.

In India, the current wedding and festive season has rekindled gold demand as the prices retract, leading to a modest uptickIn November, the average discount of domestic gold prices relative to landed costs narrowed from $15 per ounce to $12. In October, official gold imports also saw a modest increase, reaching 97 tonsHaving imported significantly in the summer, India's total gold imports for the first ten months of this year are nearing total amounts for 2023.

In Turkey, domestic gold prices have continued to rise, with physical gold demand showing strength into November

The combination of strong demand and constrained supply, due to government-imposed quotas on monthly gold imports, has positioned domestic gold prices at a significant premium over international gold prices, hovering between $100 to $130 per ounceAs November drew to a close, the stability in prices led to a dip in local interest, causing premiums to decrease back to around $60 to $75 per ounce.

Meanwhile, in Europe, retail investment demand for gold has been slowly recovering from low base levelsA recent on-ground survey by MetalsFocus in Germany indicated that investor interest is growing, particularly in smaller gold bars (notably of 10 grams and 1 gram), while demand for larger bars and coins remains subduedThe slowing pace of profit-taking by individual investors has spurred interest in newly minted gold products.

On the supply front, Newmont Corporation is shifting its portfolio, agreeing to sell its Musselwhite and Éléonore mines

Orla Mining will acquire the Musselwhite mine in Ontario for no more than $850 million, while Dhilmar Ltdplans to take over the Éléonore mine in Quebec for $795 millionThese divestitures, along with other asset sales, are expected to add a total of $3.6 billion to Newmont's revenue.

On the risk factors concerning price predictions, the upside potential for gold prices could be significantly impacted by escalating geopolitical tensions or a pivot toward a more dovish approach from the Federal ReserveConcerns regarding high U.Sgovernment debt levels will provide ample reasons for global central banks and institutional investors to raise their allocations to goldConversely, on the downside, the risk of spiraling inflation coupled with delayed rate cuts could suppress gold prices.

Turning to the silver market, similar trends have emergedAfter hitting a twelve-year high of $34.90 per ounce on October 22, silver prices began a downward spiral that intensified in early November, dropping to a two-month low of $29.65 on November 14. Silver quickly rebounded above the $30 mark, remaining in a range of $30 to $31.5 per ounce into early December

Throughout November, silver price movements have mirrored those of gold, with the gold/silver ratio fluctuating between 83:1 and 88:1, aligning with the principal range observed in 2023, which has been established between 80:1 and 90:1.

Silver, with its dual identity as both a precious and industrial metal, has felt the brunt of price declines across both sectorsThe myriad of negative factors influencing silver mirrors those affecting gold, such as profit-taking by tactical long investors, which have also contributed to recent price dropsBy late November, the gross long positions held by hedge funds in silver futures at the CME decreased by 31% since peaking in October, while overall short positions rose, albeit from lower base levels.

In contrast, November saw only a minor decline in the total holdings of silver ETPs compared to the previous month, underscoring the presence of long-term investors who typically maintain stable positions

Looking to the future, while global economic growth prospects are dimmed by proposed economic policies, it's anticipated that industrial demand for silver will remain robust in 2025. Yet, this will be accompanied by continued significant supply shortages as silver demand is expected to outpace supply for the fifth straight yearOn the other hand, abundant above-ground stocks are likely to persist, and without indications of physical silver supply tightness, MetalsFocus expresses skepticism that investor enthusiasm around silver's fundamentals could translate into price appreciation.

Silver prices are forecasted to continue tracking gold prices closely, with prevailing geopolitical and macroeconomic conditions driving investor sentiment in the marketThus, MetalsFocus reaffirms its prediction that both gold and silver prices are likely to peak in the first quarter of 2025. As investment demand softens later in 2025, silver prices may experience downward pressure.

In conclusion, U.S