ASX gold shares have been a mixed bag in 2024 despite the yellow metal itself carrying record prices this year.
Gold prices have been driven by the combo of increasing demand from investors and central banks buying up the yellow metal by the tonne.
But as gold rallied 36% this year to date, the S&P/ASX All Ordinaries Gold Index (ASX: XGD), which tracks ASX gold shares, has only climbed 23%.
Still an impressive result, but also a wide margin from the underlying spot price's gain. What gives? And what's the outlook for 2025? Let's see what the experts think.
What's driving gold's rise?
Gold prices have rallied this year due to several catalysts. Buying from global central banks has been a major driver, with an estimated 900 metric tonnes purchased in 2024.
This is well above the decade average of 325 metric tonnes per year.
According to Bloomberg, China's central bank has been the major participant, picking up its buying pace again in November.
China's central bank expanded its gold reserves in November, ending a six-month pause in purchases after prices for the precious metal rose to a record.
Bullion held by the People's Bank of China climbed by 160,000 fine troy ounces last month to 72.96 million fine troy ounces, according to official data released on Saturday.
The PBOC had added to its stockpiles for 18 consecutive months up until April this year, helping to underpin the strength in bullion prices.
Economic uncertainty and geopolitical tensions have also increased demand for gold as a safe-haven asset.
What's the outlook for gold and ASX gold shares?
The future of the gold price, and by extension, ASX gold shares, is up for debate among investor circles. But the view is generally positive.
Investment bank UBS reckons gold prices could hit US$2,800 per ounce in 2025, driven by strong demand from central banks and geopolitical instability.
Whereas RBC Wealth Management forecasts an average price of US$2,618 per ounce, supported by retail investment through exchange-traded funds (ETFs).
Meanwhile, research firm Natixis expects gold to average US$2,725 per ounce, citing lower interest rates and inflationary pressures as key contributors to its resilience.
For reference, Natixis' estimate totals AUD$4,59 per tonne at current exchange rates.
So experts reckon gold can trade higher in 2025. But what does this mean for ASX gold shares moving forward?
As a reminder, gold miners are price takers, meaning their revenues and cash flows are tied to the price of gold.
Under normal circumstances, higher gold prices are good for ASX gold shares.
If we look at the current year, ASX gold shares have been clear beneficiaries of the gold rally, somewhat mirroring the rising gold price.
Mining giant Northern Star Resources Ltd (ASX: NST) has gained 20% year to date, while Evolution Mining Ltd (ASX: EVN) is up 26%.
Meanwhile, De Grey Mining Ltd (ASX: DEG) and St Barbara Ltd (ASX: SBM) have soared, up 56% and 55% this year, respectively.
Consensus estimates have a buy rating on all three of these gold players, except De Grey Mining, which is rated hold.
With all this in mind, if the price of gold continues to rise, as experts project it will, this could be positive for ASX gold shares, meaning 2025 could sparkle.
Foolish takeaway
While no investment is without risk, the outlook for ASX gold shares in 2025 appears promising, according to experts.
This is driven by fundamentals of the underlying gold market, of which the outlook is also fairly bullish.
Time will tell what happens next.
