World Gold Council Highlights Gold's Performance for 2024: Bullish Forecasts Remain Intact
According to a new report from the World Gold Council (WGC), the year 2024 may experience the best annual performance for gold in the last decade. Gold prices reached a record high of $2,790 this year, with a value increase of 35%. As of today, gold is priced at $2,670, reflecting a 30% increase since the beginning of the year. Last year, gold provided a return of 13%, while it experienced losses in 2021 and 2022.
When examining the performance of gold over the last decade, the closest performance to 2024 was a 25% value increase in 2020, just before a two-year decline. Some analysts believe that the strong rise this year may not continue until the end of 2025, predicting that economic and geopolitical winds will be decisive for 2025 performance. Nevertheless, the demand from central banks for gold remains strong. By the third quarter of 2024, gold purchases reached 694 tons, comparable to the levels of the previous year.
Central banks in emerging markets have maintained their dominance in the gold market throughout 2024. Turkey added 72 tons, while Poland added 69 tons to its gold reserves, drawing attention. The Reserve Bank of India purchased 27 tons in October, totaling 77 tons of gold purchases, marking a fivefold increase compared to 2023.
While Asian investors continue to show steady interest, falling yields and a weakening US dollar have triggered Western investors. The increasing market volatility for gold and its role as a hedge against geopolitical risks are cited as the primary reasons for its remarkable performance. Analysts indicate that 2025 will be a challenging year for gold, especially with the impact of Donald Trump's presidency on the global economy and financial markets being an important point to watch. Developments in China will also be among the key factors to monitor closely.
Furthermore, Goldman Sachs (GS) and UBS predict a modest increase in gold prices in 2025, in an environment where geopolitical tensions and trade wars limit expectations. UBS anticipates that gold prices will reach $2,900 by the end of 2025, primarily due to rising US debt, demand from central banks, and falling interest rates. The firm noted that inflation is expected to remain persistent in the near future, with price increases anticipated over the next decade. Inflation rates are forecasted to be 3% by the end of 2024, 2.6% by the end of 2025, and 2.5% throughout 2027, all above the Federal Reserve's 2% target.
Factors influencing UBS's outlook for rising gold prices include persistent inflation and the challenges the Fed faces in combating it. Increasing budget deficits, a decline in globalization, and long-term trends such as carbon reduction could lead to high inflation over the next decade. Protectionist policies, such as tariffs and other trade restrictions by Donald Trump, could result in higher costs for consumers and businesses, potentially slowing global economic growth.
Why are investors turning to gold? The growing regulatory pressures for the global green energy transition also affect gold demand. Limited natural resources, environmental taxes, insurance costs, and legal restrictions could lead to high energy costs that trigger price increases across the economy. UBS suggests that gold could be seen as a hedge against geopolitical risks, rising national debt, and policy changes.
UBS recommends that investors turn to gold in response to increasing demands from central banks and notes that factors such as rising national debt in the US and falling interest rates will support gold prices. Based on these reasons, the bank forecasts that gold will reach $2,900 per ounce by the end of 2025.