Gold prices are set to achieve an impressive annual increase of over 27%, marking the largest yearly rise since 2010. This surge is attributed to heightened safe-haven demand and central banks’ rate cuts, although the market sentiment may shift depending on policy changes under a potential second Donald Trump presidency.
Key Highlights:
Current Market Performance:
As of Tuesday, spot gold rose 0.7% to $2,624.24 per ounce, while U.S. gold futures settled 0.9% higher at $2,641.00.
Gold reached an all-time high of $2,790.15 on October 31, 2024, fueled by strong central bank purchases and geopolitical uncertainties.
Future Outlook:
Analysts anticipate that the factors supporting gold prices in 2024 will continue into 2025, although potential headwinds from Trump’s policies could introduce inflationary pressures and slow Federal Reserve rate cuts.
Nicky Shiels, head of metals strategy at MKS PAMP SA, commented, “Gold is in a secular bull market, but the direction of travel won’t be as one-directional in 2025 as in 2024.”
Political and Economic Influences:
The sentiment around gold has been influenced by political events, with analysts suggesting that the peak of political fear has passed following Trump’s decisive win.
Central bank buying trends are expected to maintain a steady pace, though they may become more discreet due to potential tariffs on countries perceived as de-dollarizing.
Market Dynamics:
Gold typically thrives in low-interest-rate environments, serving as a hedge against economic and geopolitical risks. However, the rally saw a slowdown in November as the dollar strengthened amid “Trump euphoria.”
Tom Mulqueen, metals strategist at Citi Global Markets, noted, “The gold bull market has taken a pause following U.S. presidential elections but should resume in 2025.”
Performance of Other Precious Metals:
Spot silver fell 0.3% to $28.87 per ounce but is on track for its best year since 2020, with a nearly 22% increase.
Palladium rose 0.9% to $908.67, while platinum decreased 0.1% to $903.15. Both platinum and palladium are expected to record annual losses, down over 8% and 17%, respectively.
Silver Price Projections:
Citi’s Mulqueen predicts silver prices could rise to $36 per ounce due to a significant market deficit and anticipated Fed rate cuts through 2025. However, he cautioned that silver may not outperform gold due to headwinds in industrial demand growth.