Gold Performs with Gains and Continues to Rise in 2025

• Gold demonstrated exceptional performance in 2024, gaining 27% and outperforming all other precious and base metals, with momentum continuing into 2025 as prices approached $3,000/oz amid heightened geopolitical tensions and economic uncertainty.
• Despite traditional headwinds from rising bond yields and a strengthening dollar, gold has shown remarkable resilience, suggesting that other factors such as geopolitical risks and strong investor sentiment are currently more influential in driving prices.
• Under consensus forecasts, gold could reach $3,070/oz by Q4 2025, with more bullish scenarios suggesting potential if inflation remains elevated and the Federal Reserve continues its cutting cycle.
• Gold producers with positive cash flow like Integra Resources, Metals Exploration, G2 Goldfields, MORE HERE
• enjoy significant advantages, allowing them to self-fund operations and expansion without dilutive financing while benefiting from higher gold prices.
• For investors seeking portfolio diversification, inflation protection, and a hedge against geopolitical uncertainty, gold merits serious consideration as part of a balanced investment strategy.

Gold has demonstrated remarkable resilience and growth in recent years, solidifying its position as a premier investment asset. In 2024, gold outperformed all other precious and base metals, achieving an impressive gain of 27%. This strong momentum has continued into 2025, with gold prices reaching $2,927/oz in March.

Nitesh Shah, Head of Commodities and Macroeconomic Research at WisdomTree, notes the metal's stellar performance:

"Gold is synonymous with the best. Think about a gold medal at the Olympics or the phrase 'as good as gold'. This reputation for excellence extends to its market performance, as demonstrated by its stellar run in recent years."^[1]

While gold hasn't yet reached its all-time inflation-adjusted high from 1980, the gap has narrowed significantly to just 22%—the closest it has been in 40 years.

Macroeconomic and Geopolitical Factors Driving Gold Prices

Several key factors are currently influencing gold's price trajectory and investment appeal. Despite facing headwinds from bond markets and a strong dollar, gold has continued to gain strength, primarily due to heightened geopolitical and economic uncertainty.

The inauguration of Donald Trump as U.S. President on January 2025, has brought ongoing concerns about U.S. tariffs and a pause in the Federal Reserve's rate-cutting cycle. According to CME Group's month report update, "These factors increased market uncertainty, which is reflected in the gold price."

Trump's administration has adopted a confrontational stance toward several countries in its first weeks, including potential new sanctions on Russia and stricter enforcement of sanctions on Iran. There have also been notable tensions with Denmark (regarding Greenland), Colombia, Canada, Mexico, and China. While many view these actions as strategic bargaining, they nevertheless contribute to market uncertainty.

WisdomTree's model framework indicates that speculative positioning (a measure of sentiment toward gold) has emerged as the biggest driver of gold prices over the past year. Net speculative positioning in gold futures has returned to the levels seen in October 2024, reflecting strong sentiment toward the asset.

Interest Rates, Inflation, and Currency Factors

The relationship between gold, interest rates, and currency values remains complex. Traditionally, rising bond yields and a strengthening dollar create headwinds for gold prices. However, as witnessed in 2023 and 2024, gold has demonstrated an ability to defy these pressures.

A repricing of U.S. interest rate expectations for 2025 has seen bond yields rise and the U.S. dollar appreciate. Yet gold has continued to perform strongly despite these traditional headwinds. This suggests that other factors, particularly geopolitical risks and strong investor sentiment, are currently more influential in determining gold prices.

According to WisdomTree's analysis, the consensus scenario for 2025 anticipates inflation initially declining but rising again with year-end values above target, the dollar depreciating slightly, and bond yields declining marginally. This scenario is based on Fed funds rates falling to 4.00% by the end of the year from 4.50% in January 2025.^[1]

Price Forecasts and Market Outlook

Various scenarios for gold prices in 2025 have been projected. Under the consensus scenario, which assumes moderate inflation, slightly declining bond yields, and a mild dollar depreciation, gold could reach US$3,070/oz by Q4 2025, clearly above the October 2024 high.

In a more bullish scenario, where inflation remains elevated and the Federal Reserve continues its cutting cycle, possibly under pressure from the new Administration, gold could reach US$3,450/oz by Q4 2025. Even in a bearish scenario, which assumes no more rate cuts and rising bond yields to 5.60%, gold could initially fall but still maintain a relatively strong position at $2,300/oz.

Gold Companies

Integra Resources

Integra Resources represents a strategic opportunity in the gold sector, having successfully transitioned from developer to producer through its Florida Canyon acquisition. With Florida Canyon generating meaningful cash flow, the company's significant growth pipeline could increase production from current levels of 72,000-75,000 ounces to approximately 300,000 ounces annually at full capacity.

George Salamis, President and CEO, highlights how the current regulatory environment supports their growth:

"Since the administration's been in power, we've seen weekly changes or improvements to the permitting process. That's really huge for us."

This regulatory tailwind could accelerate development timelines and reduce costs. The valuation proposition is also particularly compelling, trading at 0.25 of NAV right now. This valuation gap presents an opportunity for investors seeking exposure to a producer with significant growth potential in a favorable gold price environment.

Metals Exploration

Metals Exploration exemplifies the financial strength thesis highlighted in our article, operating as a debt-free producer generating approximately $10 million in monthly free cash flow from its Runruno operation in the Philippines. With all-in sustaining costs of around $1,000 per ounce, the company maintains robust margins in the current gold price environment.

The company's growth strategy centers on the Condor Gold project in Nicaragua, which aligns with our discussion of companies that can efficiently extract and process gold in stable jurisdictions. Rather than taking on debt for expansion, Metals Exploration is using existing cash flow to fund growth—a significant advantage in today's market.

CEO Darren Bowden articulates the financial discipline:

"We're looking at a build and growth of our company through the cash flow that's coming off our existing operations. We're not looking at financing, we're not looking at taking on any more debt in the near term."

The company has demonstrated operational efficiency by purchasing a second-hand processing plant for $10 million (versus typical costs of $60 million), with commercial production targeted for Q4 2026. By 2028, Metals Exploration aims to become a two-mine operation with potential for 145,000 gold ounces annually from Nicaragua alongside continued Philippine production, positioning it as an emerging mid-tier producer with significant free cash flow potential.

G2 Goldfields

G2 Goldfields' recent milestone of exceeding 3 million ounces at its Oko-Aremu project in Guyana demonstrates the resource growth potential we emphasized for gold investments. This represents their third consecutive resource update, progressing steadily from 1 million to over 3 million ounces through systematic exploration.

The project features exceptional grades, particularly at the OKO Main Zone where shears contain approximately 960,000 ounces averaging about 9 g/t gold. This high-grade component is especially valuable in today's gold price environment, potentially delivering superior margins and returns. Gold recoveries averaging 94-98.5% suggest potential for cost-effective processing and metallurgical characteristics further enhance the investment case,

CEO Dan Noone emphasizes the project's resilience:

"The ounces always seem to be there; it doesn't really matter what parameters we put in [...] It's very simple metallurgy. It's a very clean system, and the gold has come in very late and isn't encapsulated in silica or pyrite."

With $37 million in cash and strategic interest from AngloGold Ashanti (15% ownership), G2 fits our profile of companies positioned to benefit from the strong gold market and potential M&A activity, as major producers increasingly look to acquisitions to replace depleting reserves.

The Investment Thesis for Gold

• Portfolio Diversification and Protection: Gold has historically shown low correlation with other major asset classes, making it an effective diversifier in investment portfolios. In times of market turbulence, gold often moves independently of stocks and bonds.
• Inflation Hedge: With inflation concerns persisting globally, gold's traditional role as an inflation hedge makes it attractive. Even in WisdomTree's consensus scenario, inflation is expected to remain above target by year-end 2025.
• Geopolitical Insurance: The current geopolitical landscape is marked by increasing tensions and uncertainty. Gold provides a form of insurance against geopolitical shocks that could negatively impact other investments.
• Central Bank Support: Ongoing purchases by central banks, particularly from emerging economies looking to diversify away from dollar-denominated assets, provide a structural support for gold prices.
• Technical Momentum: Gold's price action shows strong upward momentum, with prices consistently making new nominal highs. This technical strength attracts momentum-focused investors.
• Currency Debasement Protection: In an era of high government debt and accommodative monetary policies, gold offers protection against currency debasement.
• Consider Allocation Size: Investors should consider allocating 5-10% of their portfolio to gold, depending on their risk tolerance and investment objectives.
• Entry Strategy: Given gold's strong recent performance, investors might consider a dollar-cost averaging approach rather than a lump-sum investment.
• Investment Vehicles: Options include physical gold, gold ETFs, gold mining stocks, or futures contracts depending on investor sophistication and preferences.

Conclusion

Gold's strong performance in recent years appears positioned to continue through 2025, supported by a combination of macroeconomic factors, geopolitical tensions, and strong investor sentiment. While traditional headwinds such as rising bond yields and a strong dollar exist, they currently seem to be overshadowed by other positive drivers.

The consensus forecast suggests gold could reach new highs by the end of 2025, with even the bearish scenario projecting relatively strong price levels. For investors seeking portfolio diversification, inflation protection, and a hedge against geopolitical uncertainty, gold merits serious consideration as part of a balanced investment strategy in 2025.

‍

References:

1. Morton, Michael (February 2025). The ArmChair Trader. Gold Outlook: Will 2025 Be Another Record-Setting Year?
2. CME Group (February 2025). Micro Gold, Silver and Copper Products Update – February 2025