YEARLY REVIEW OF GOLD PRICES
As 2024 draws to a close, it’s time to reflect on a year that gave a number of surprises impacting the financial markets. There were major elections and plenty of geopolitical tensions taking place amid changing monetary policies. It’s well worth examining how a major instrument, Gold, performed this year and what major catalysts affected the metal price. Lastly, what could be expected in 2025, particularly bearing in mind a new US Trump-led administration?
- GOLD: GEOPOLITICAL TENSIONS
It’s commonly understood that the precious metal is a so-called safe-haven instrument: in times of instability, conflict, and uncertainty, traders have traditionally flocked to the metal, and 2024 was no exception. Gold started the year strongly amid some fears over a potential global recession amid the escalating conflict in Ukraine and the war between Israel and Hamas/Hezbollah. Gold prices rose to hit all-time highs both in the first half and second half of the year amid a short conflict between Israel and Iran and the Syrian civil war. Market participants were also worried at the prospect of a close, disputed election in the US in November, which never unfolded after a comfortable Republican victory. Concerns over the political stability of two of Europe’s largest economies, France and Germany, emerged as a bigger worry, as both countries are set for unscheduled elections next year where Eurosceptic parties could benefit.
- GOLD: INTEREST RATES
US Interest rates are as important as geopolitical events. Lower interest rates impact gold prices and make the precious metal more attractive than yielding alternative investments. At the same time, declining interest rates can weaken the dollar, making gold prices more affordable for foreign currency traders. As the leading global economy, US interest rates have the most influence on gold prices, but when other major global central banks cut rates, this also underpins the metal.
- GOLD’S PRICE MOVEMENT IN 2024
Gold prices have seen much volatility this year. With so many conflicts and much political uncertainty, there was plenty of safe haven trade. But the “Goldilocks” scenario of high tensions and global central banks cutting interest rates meant that Gold prices were anticipated to rise this year. The precious metal hasn’t disappointed and has hit repeated all-time highs throughout the year, including the latest record peak on October 30th of $2789.
- EXPECTATIONS FOR 2025 AND A TRUMP PRESIDENCY
As market participants look ahead to 2025 with gold prices in mind, many of the aforementioned geopolitical factors remain in focus. But an additional concern could be US-China relations. Under Trump’s previous presidency, the trade war between the US and China began, and the billionaire has long been an ardent critic of China. But others hope that Trump could be able to influence the end of the Ukraine-Russia war, while others point to his longstanding and firm support for Israel and his opposition to Iran and the potential impact in the Middle East. Trump has already made it clear that the US will implement fresh tariffs on China, but also on allied countries such as Canada, Mexico, and potentially Europe. Those tariffs could cause the price of foreign goods to become more expensive in the US, potentially pushing inflation higher. This restricts the ability of the Fed to cut interest rates, which is not considered positive for gold prices. However, analyst forecasts from major investment banks remain optimistic that gold prices could hit further all-time highs. Citigroup and Bank of America forecast Gold prices to rise to $3000 in the coming months, but, the price can decline.
Conclusion –
It is difficult to estimate what the future could bring, but some assume that the future won’t look so different from the recent past. Central banks are expected to continue cutting interest rates, and it appears unlikely that peace will break out easily in any of the longstanding conflicts plaguing the world. Gold prices tend to increase in these conditions. And with this review of the precious metal prices, we would like to extend happy holiday greetings to our readers!