As we step into 2024, a wave of optimism surrounds the gold market, with international gold prices reaching unprecedented highsThis upward trend has led to significant performances by gold funds, evident in a marked increase in their sharesInvestors and analysts alike are keenly monitoring these developments, particularly as they anticipate future market movements.

Industry professionals suggest that the upward trajectory of gold prices is likely to continue through 2025. However, they caution investors about the potential risks inherent in this volatile marketIt is advised to employ a diversified investment strategy, ensuring a balanced portfolio to withstand fluctuations.

A Remarkable Year for Gold Funds

In 2024, multiple factors such as the U.S

Federal Reserve's interest rate cuts, ongoing geopolitical conflicts, and a consistent increase in gold holdings by global central banks have driven the gold market's robust performanceThroughout the year, gold prices have hit new highs over 30 times, leading to an impressive annual increase of more than 27%.

As prices soared, gold-themed funds experienced remarkable resultsTaking exchange-traded funds (ETFs) as an example, over 70% of gold ETFs recorded a full-year net asset value growth of more than 27% in 2024. Notably, the E Fund Gold ETF boasted a net value growth rate of 27.57%, while the China Universal Gold ETF followed closely with a growth of 27.47%. Other ETFs like the Bosera Gold ETF and the HuaAn Gold ETF both registered a growth of 27.45%.

Moreover, gold ETFs have shown a tremendous ability to attract capital, with approximately 90% of products experiencing a doubling in their shares

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Analysis revealed that the Yongying CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF saw a staggering 1291% increase in its shares in 2024, while the GF Shanghai Gold ETF recorded a 993% share increase and the ICBC Gold ETF exceeded 660% growth.

Expectations for Continued Price Increases in 2025

Looking ahead to the gold market in 2025, many surveyed institutions overwhelmingly believe that gold prices are set to retain their upward momentumThis optimism can be attributed to several key factors.

According to Song Qing, General Manager of the International Business Department at Noah Fund, core drivers supporting the long-term rise of gold prices include geopolitical tensions, the evolving international trade environment, and a realignment of the global monetary system

Firstly, central banks around the world are gradually entering a rate-cutting phase, which enhances the appeal of gold due to the impacts of monetary easingSecondly, the expansion of BRICS nations, now increasing from 9 to 18 members, represents over 41% of global GDP and more than half of the world’s populationThis diversification of global trade settlement currencies undermines the monopoly of any single currency as a world reserve currency, potentially increasing the demand for gold and other alternative reserve assets.

Song further explained that the complex geopolitical landscape continues to introduce significant uncertainties, while central banks worldwide maintain their commitment to increasing their gold holdings, reflecting strong confidence in gold as an asset.

He also noted that while the arrival of a new U.S

government and anticipated changes may cause temporary fluctuations in gold prices, they are unlikely to interrupt the overall upward trend.

According to Guotai Fund, early 2025 has witnessed ongoing increases in international gold pricesMedium-term perspectives indicate that the Federal Reserve’s transition into a rate-cutting cycle will continue to support gold pricesMoreover, concerns around excessive money supply and fiscal deficits challenge the credibility of the dollar, especially amid rising global geopolitical instability, which drives the demand for gold as a safe assetThe trend towards “de-dollarization” signifies that gold may become a new anchor for pricing, potentially leading to an increase in its value.

Advisories on Potential Risks

Despite the broader market expectations for continued price increases in 2025, experts highlight numerous potential risks that could affect gold prices.

A Beijing-based fund company suggests that global economic and political uncertainties may lead to unpredictable fluctuations in gold prices, with interest rate changes—particularly those stemming from U.S

Federal Reserve policies—having significant impactsWhile geopolitical events can result in increased gold prices, such upswings are often difficult to predictAdditionally, changes in inflation rates and fluctuations in the dollar's exchange rate can affect gold's real purchasing power and market pricesRisks surrounding liquidity, policy, and fraudulent platforms may also pose threats to investors, complicating timely trades.

Song Qing emphasized attention to risks such as potential impacts from a new U.Sgovernment, including expectations surrounding dollar interest rates and government debt; the resolution of geopolitical conflicts; and shifts in the global trade environmentTo navigate through market volatility and uncertainties, investors are encouraged to consider a dollar-cost averaging approach to smooth out costs and diminish the risks associated with one-time investments.

The Beijing fund company advises investors to adopt a diversified investment strategy when allocating gold assets to strike a balance between potential risks and returns