"Gold is set to test $3,750/oz this year but expect volatility along the way"

THE price of gold hit a new high on Wednesday morning, as investors increasingly shift into safe haven assets amid ongoing global economic uncertainty. Silver’s surge has been even sharper, with the price edging further above $40 an ounce this week. While some experts expect the yellow metal to continue its bull run and possibly hit $3,750/oz this year, others warned that investors should be careful of buying in at such elevated levels.

Nick Cawley, Analyst at Solomon Global, said he expects gold to keep increasing in price: "Gold is set to test $3,750/oz. this year but expect volatility along the way. Foreign central bank demand, reflecting a broader shift away from traditional safe-haven US Treasuries, continues to drive gold ever higher. 

"Ongoing rate cuts by major central banks are set to keep driving up gold and silver prices amid enduring geopolitical tensions and economic uncertainties.
 The fundamental drivers supporting both metals remain robust, buoyed by continued central bank diversification away from dollar-denominated assets (US Treasuries). 

“A recent report shows central banks' gold holdings overtaking US Treasury holdings for the first time in nearly three decades. In addition, persistent geopolitical uncertainties, accommodative monetary policy, and silver's role in the green energy space continue to drive prices ever higher. This convergence of factors suggests both precious metals are set to print new highs in 2025 and beyond as buyers continue to control price action.”

But Eamonn Prendergast, Chartered Financial Adviser at Palantir Financial Planning Ltd, sounded a note of caution: "Investors should be cautious about chasing performance when it comes to gold. It’s far more volatile than many realise and can also fall during a crisis. During Covid, it fell sharply in March 2020 when investors needed cash. 

“Gold generates no income, and its value is largely sentiment-driven rather than based on fundamentals. That said, some of my clients hold a small allocation of around 5% as part of a diversified portfolio. Investors have to be careful of gold FOMO, as it can lead to rash decisions.”

Benjamin Beck at Beck Money Coach also warned DIY investors to be careful: “Though surges like this can spark excitement, the DIY investor must be careful. Before you pile in, consider whether it's consistent with your overall investment approach.”

Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, also expects gold to keep going up in price.

He said: "If there is one asset class that has survived the test of time, it’s gold. Gold traditionally performs well during periods of economic uncertainty and inflation—and we are experiencing both right now. Goldman Sachs Research predicts that gold will rise to $3,700 per troy ounce by the end of 2025, driven by strong central bank buying that supports demand. 

"The often-recited downsides of gold include no income generation, as it produces no dividends or interest; storage and insurance costs; and currency sensitivity, as gold’s inverse relationship with the US dollar can create volatility.

“Silver, unlike gold, has significant industrial applications, creating dual demand drivers, and its low entry point makes it more accessible for smaller investors. The key question isn't whether these metals will go higher, but whether the risk-reward profile makes sense at current elevated levels for your specific situation and risk tolerance.”

Samuel Mather-Holgate, Independent Financial Adviser at Swindon-based Mather and Murray Financial, said economic uncertainty is leading to precious metals being more attractive for investment.

He said: "There’s been global uncertainty for financial markets since Trump won the election, so that isn’t new. However, Powell has signalled rates might be heading lower and this makes gold even more attractive in an uncertain world. 

“With faith in the Fed on shaky ground due to Trump’s continual attacks on the chairman, and European governments out of ideas on how to simulate growth with sky high spending commitments, it’s no wonder precious metals keep on rising.”

Carol Vickers, Owner at Created by Carol, said her jewellery business is being hit by higher prices.

She added: "As a jeweller, the sharp rises in precious metal values are a double edged sword. While jewellers who keep bullion in stock will see an increase in its value, the market impact of skyrocketing prices inevitably means that producing affordable pieces becomes vastly more difficult. 

“In a time when consumer pockets are already squeezed by the cost of living crisis, many jewellery businesses are struggling to meet sales targets. As any jeweller knows, precious metal prices always soar when the financial markets are wobbly; it's rarely a good sign. Further increases in bullion costs could well put many small jewellers out of business.”

Jim Tannahill, Managing Director at London-based pawnbrokers Suttons & Robertsons, said he is seeing more interest in gold as time goes on.

He said: "Nobody can predict where the gold price will go - if they could, they’d already be extremely wealthy. Historically, gold has performed exceptionally well and we have seen a sharp increase in people selling gold as prices have continued to rise. 

"Indeed the gold price has nearly doubled since early 2023, and over the past 10 years, gold has risen by over 200%. For long-term holders, this may perhaps be an opportune time to sell. There aren’t many investments where you will have made 20%+ annual return over 10 years. 

“Others prefer to retain their investment and raise short-term liquidity by borrowing against their gold – as prices have risen the more you are able to borrow against it for short term funding. Many people invest in gold as a hedge against uncertainty so it’s always worth considering holding as part of a diversified portfolio as it can always be leveraged to cover short term liquidity challenges.”