Gold prices have already surged an impressive 25.65% since the beginning of 2025, reaching record highs above $3,500 per ounce, per GoldPrice.org. Recent market volatility saw gold experience its biggest one-day drop in nearly four years, falling 3.7% to settle at $3,294.10.
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Despite this correction, experts believe the precious metal remains positioned for potential gains over the next twelve months.
Gold’s remarkable climb this year culminated in an all-time intraday high of $3,509.90 before support suddenly gave way to profit-taking. According to Trading Economics, gold is expected to trade at approximately $3,249.60 by the end of this quarter. Central banks continue supporting demand, purchasing 244 tonnes in the first quarter despite a 21% decrease from 2024 levels, per Reuters.
Real interest rates currently favor gold investments, with the 10-year Treasury yielding 4.5% against 2.3% inflation rates. According to T. Rowe Price, this creates a real interest rate of 2.2%, which remains below historical averages of around 3%. Lower real rates traditionally reduce the opportunity cost of holding non-yielding assets like precious metals.
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Thomas Winmill, Portfolio Manager at Midas Funds, expects volatility, but maintains a positive long-term outlook for gold prices. According to Winmill, investors should anticipate random price movements driven by unpredictable geopolitical factors in the short term. However, several fundamental factors support potential price appreciation over the coming twelve months.
Continued central bank demand from creditor nations provides underlying support for gold prices, according to industry analysis. Massive deficit spending and growing government debts worldwide could lead to currency debasement, historically benefiting precious metals. Current low interest rates and persistent inflation concerns create an environment where gold often outperforms traditional investments.
Geopolitical tensions in the Middle East and unresolved trade frictions between major economies further enhance gold’s appeal. These factors combine to create conditions favorable for potential price appreciation through 2026.
Gold’s 20-year track record shows a compound annual growth rate of 9.8%, with significant year-to-year variation. According to DiversifyGuy, the best single-year performance reached 31.4% in 2007, while the worst declined 28.3% in 2013, based on historical data. This volatility demonstrates why experts recommend viewing gold as a long-term wealth preservation strategy rather than speculation.
