Gold has always been a symbol of wealth, luxury, and prosperity in the world. However, gold is not just a symbol; it is also an integral part of the global economic and financial system.
This precious metal is used in various industries such as currency, investment, and even electronics and dentistry. Considering all of this, a question arises: what indicators and characteristics determine the price of gold?
Gold has always been valuable
In a world where financial markets are constantly fluctuating, gold remains a symbol of eternal value. This precious metal has been considered one of the most reliable investment assets, maintaining its value over centuries. Gold is known for its ability to retain its value during periods of economic instability and crises. Unlike fiat currencies (money that is not backed by gold or other precious metals), gold is not subject to inflation or devaluation. During times of economic downturn and uncertainty, investors often turn to gold as a "safe haven."
Thus, gold is also one of the important assets from an investment perspective. Investing in gold can take many forms, from purchasing physical gold to investing in gold funds and ETFs (exchange-traded funds). Gold is also seen as a way to diversify an investment portfolio and reduce risk.
Considering this, central banks and governments continue to hold significant amounts of gold, demonstrating its lasting value and importance. In other words, gold currently plays a key role in the modern world economy, and the strong surge in its price on global markets proves this.
The road to price increase
It is important to note that 2024 has been the most successful year for gold in the past decade, surpassing the returns of the stock market, and it has become one of the best-performing assets.
Throughout the year, gold's price set 40 new record highs. In the fourth quarter of the previous year, the average price of one troy ounce of gold (31.1 grams) reached a record level of 2,663.4 USD, marking a 35% increase year-on-year. In turn, the average annual price of gold per ounce was 2,386.2 USD, which is 23% higher than the 2023 figure.
"Increases in gold production and processing have led to a rise in the total supply of gold. Overall gold supplies increased by 1% year-on-year, reaching 4,974 tons, which is the highest level according to our data," noted the World Gold Council (WGC).
According to WGC, global demand for gold reached a record 4,974.5 tons in 2024, representing a 1% increase year-on-year. In the fourth quarter, global demand for gold stood at 1,297.4 tons, which is 1% higher than the same period in 2023.
An important point is that in the fourth quarter of the previous year, the demand for gold, in value terms, amounted to USD 111 billion. At the end of the previous year, demand for gold reached its highest annual level in history, reaching USD 382 billion.
The rapid increase in gold prices in recent years is linked to the actions of central banks. Between 2022 and 2024, the precious metal appreciated by 50%, and official purchases reached record levels. During this period, central banks bought more than 1,000 tons of gold each year on average, nearly three times the average annual amount (350 tons).
Experts from the WGC, the Official Monetary and Financial Institutions Forum (OMFIF), and investment analysts attribute the sharp increase in gold prices in 2024 to a number of factors: the sharp rise in inflation during the pandemic and energy crisis, changes in central banks' monetary policies, and increasing geopolitical tensions. Key factors include the Russia-Ukraine conflict, escalating tensions in the Middle East, and numerous elections affecting half of the world's population.
The next leap
No matter how much we talked about the unprecedented rise in the price of the yellow metal last year, it cannot be compared to the figures of 2025. The price of gold continues to surge rapidly, breaking new records.
Recently, the price of gold surpassed the $3,370 mark, setting a new record. This is 26% higher in comparison with the beginning of the year.
Against this backdrop, the general price target for gold in 2025, set by the largest U.S. banks ("JPMorgan," "Goldman Sachs," "UBS," and "Citigroup") at the $3,000 level last year, has already lost its relevance.
Forecasts fueled by record highs
The sharp rise in prices is sparking new forecasts and expectations. Recently, analysts at Goldman Sachs have revised their gold price projections upward. The investment bank expects the price of gold to reach $3,700 per ounce by the end of this year, and $4,000 per ounce by mid-2026.
This is the second time in just a month that Goldman Sachs has updated its forecast. In March, the bank’s analysts had already raised their year-end 2025 gold price target to $3,300 per ounce.
Goldman Sachs anticipates stronger demand for gold purchases from central banks—averaging 80 tons per month (up from the previous estimate of 70 tons). Additionally, rising recession risks are likely to boost inflows into gold-backed exchange-traded funds (ETFs).
"The increase in gold purchases likely reflects renewed investor demand for hedging against recession risks and a decline in the prices of riskier assets," Goldman Sachs analysts noted.
Meanwhile, UBS Group has also raised its gold forecast. The bank’s analyst, Joni Teves, predicts that the precious metal could reach $3,500 per ounce by December 2025.
Teves pointed out that strong demand for gold will come from various sources—including retail investors, private wealth managers, and institutional asset allocators.
The reason for the change in trade policy
The new forecasts have emerged due to the sharp rise in gold prices. This uncertainty is related to U.S. President Donald Trump's trade policy, which has increased volatility in global markets. Sharp changes in the U.S. foreign trade tariff policy have led to large-scale sell-offs of stocks, bonds, and the dollar, which occurred amid growing concerns about a potential global recession.
Azerbaijan increases its gold reserves
The existing global uncertainties and ongoing geopolitical processes have also posed new challenges for Azerbaijan. In this context, the State Oil Fund of Azerbaijan (SOFAZ) is increasing its investments in gold in accordance with the pre-determined targets in its investment strategy.
As part of these plans, the Oil Fund will increase its gold reserves to 170 tons this year, with its share in the investment portfolio reaching 25%.
According to SOFAZ's latest report, in the first quarter of 2025, gold investments accounted for $16.1344 billion (25.8%) of the Fund's investment portfolio. Over the three months, SOFAZ increased its gold investments by $3.7798 billion. At the end of last year, gold investments accounted for $12.3546 billion (20.6%) of the Fund's portfolio.
It should be noted that in the first quarter of this year, SOFAZ purchased 18.7 tons of gold. While the Fund's gold reserves stood at 146.6 tons at the end of 2024, by April 1 of this year, this figure had risen to 165.3 tons. Overall, since the beginning of 2024, SOFAZ has purchased 63.5 tons of gold.
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