With the new year just three months away, 2025 is shaping up to be the strongest year for the bullion market since 1979, according to a new report.

There is a 75% chance that gold will breach US$4,000 per ounce in the fourth quarter of 2025 or by early next year, State Street Investment Management ( IM ) says in its latest Monthly Gold Monitor.

And while November and December are historically weak months for the precious metal, a likely 7-8% decline would prompt investors to buy the dip.

One key factor is the US dollar downtrend. “With the greenback posting its steepest annual decline since the 1970s, gold is benefitting from denomination effects,” the report says. “The resumption of the Fed cutting cycle amid a lingering domestic inflation and fiscal impulse may also prompt further bull steepening of the US treasury curve”, which can support gold prices and weigh on the US dollar.

Meanwhile, global flows into gold exchange-traded funds ( ETFs ) have been the strongest since 2020, and physical holdings are still below the peak reached during the pandemic, suggesting scope for further buying.

State Street IM also notes that the risk of inflation is re-emerging in the United States amid the current administration’s tariff policy – a concern the Federal Reserve has echoed.

“Although a soft landing remains a plausible baseline, persistent labour market weakness raises the risk of a recession or stagflation, supporting gold allocations,” the report says.

The bullion rally is also supported by central banks accumulating the precious metal, strong retail demand from China, and investors hedging against market volatility and geopolitical risks.