Why Gold Prices Are Set to Rise in 2025 – Insights from a Jeweller

Disclaimer: This is not investment advice. However, based on current trends, I do not anticipate a decline in gold prices in 2025. Read on to understand why.

Why Gold Prices Are Poised to Rise in 2025

Gold has demonstrated remarkable growth over the past few years, significantly outperforming traditional investment vehicles such as equities and bonds. In 2023, gold was priced at approximately $80 SGD per gram, and by 2025, it surged to $125 SGD per gram—a staggering 55% increase over two years. This level of return is particularly impressive considering that gold is historically regarded as a safe-haven asset with low risk exposure. Achieving such substantial gains on an asset class known for stability is unprecedented, making gold an attractive option for investors seeking strong returns with minimal risk.

The Impact of Gold Jewellery Demand on Prices

Unlike bullion, gold jewellery incorporates retail and craftsmanship premiums, meaning its price does not directly mirror the spot price of gold. However, the underlying intrinsic value (scrap value) of gold jewellery appreciates in tandem with rising gold prices. For instance, an 18K gold bracelet purchased for $300 SGD in 2023 may have had an intrinsic value of $100 SGD at that time, which would have increased to $150 SGD in 2025. While the retail price may include additional costs, the fundamental value of gold jewellery continues to rise, making it a unique asset that combines aesthetic enjoyment with long-term value appreciation.

Additionally, the jewellery industry is one of the largest consumers of gold. Many individuals purchase gold jewellery as heirloom pieces, effectively removing a portion of the gold supply from circulation—similar to a stock buyback. This reduction in circulating gold supply, coupled with the rising cost of energy (a critical factor in gold mining), is expected to further limit gold availability in the market.

Central Banks and Government Demand for Gold Reserves

The current global geopolitical landscape is fraught with uncertainty. Factors such as wars, de-globalization, trade tensions, climate change, and political polarization have created economic instability. As a result, many governments have increased their gold reserves to safeguard their national economies and stabilize currency values. This heightened demand from central banks is a significant driver in sustaining higher gold prices.

What Could Cause Gold Prices to Decline?

Despite the strong upward trajectory of gold prices, there are a few scenarios that could trigger a meaningful decline:

1. Cheap Energy Sources
   Gold is an abundant element on Earth, but its extraction and refining processes are highly energy-intensive. If there is a breakthrough in low-cost energy production (such as advancements in nuclear energy), the cost of mining could decrease significantly, leading to a potential drop in gold prices.

2. Technological Advancements
   Innovations that enable efficient gold extraction or the discovery of new, accessible gold reserves could increase supply and exert downward pressure on gold prices.

Gold Price Predictions for 2025

Barring any major market disruptions, I anticipate gold prices to continue their upward trajectory, reaching approximately $150 SGD per gram in 2025. However, a significant correction in equity markets could influence short-term fluctuations in gold prices.

While no investment is without risk, the combination of high demand, limited supply, and geopolitical uncertainty suggests that gold will remain a strong asset in the foreseeable future.

Key Takeaways

• Gold prices have surged 55% in two years, outperforming traditional investments.

• Jewellery demand and central bank purchases continue to drive gold price increases.

• Factors like cheap energy and technological breakthroughs could lead to price declines.

• The gold price forecast for 2025 suggests continued growth, with estimates reaching $150 SGD per gram.

By staying informed about these trends, investors can make well-reasoned decisions regarding their gold investments.

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