Investor's Guide to Gold in 2024

The gold price surged in 2024, achieving a long series of new all-time highs. This article will analyse the reasons behind this impressive rally, focusing on gold’s role in a financial portfolio nowadays and the advantages that holding precious metals offers investors.

Key takeaways

• 2024 has been a milestone year for gold, with prices increasing by over 30% in just ten months (YTD).
• The bullish trend continues, supported by strong physical demand, expectations of declining interest rates and significant central bank purchases.
• Despite uncertainties in the global economic landscape and escalating geopolitical tensions, gold’s appeal remains unquestioned. It continues to serve as a reliable store of value and a potential hedge against any resurgence of inflation.

Analysing the Gold Price Surge

In recent months, gold has made headlines multiple times, capturing the attention of financial analysts and investors alike. Indeed, its price jumped by over 30% in 2024, surpassing the S&P 500, Nasdaq, and all other major stock indexes. One of the few assets that could achieve a similar performance was silver, which is traditionally closely linked to gold. 

This rally has been supported by solid demand from a diverse range of investors, including central banks, institutional funds, and retail investors.

The reasons driving gold’s bullish momentum are clear and compelling. Various market factors have significantly increased the demand and price of precious metals. Analysing these influences is crucial, as they will undoubtedly play a vital role in shaping the gold market landscape in 2025.

Expectations for lower interest rates

Traditionally, when rates slow down, the price of gold increases. While the 2024 rally appears to have many supporting reasons, one key factor is the anticipation of lower interest rates. Indeed, in the last few months, the Bank of England, the European Central Bank, and other major central banks cut rates, followed by the “jumbo-cut” of half a percentage point by the Federal Reserve in September.

Investors expect central banks to continue this process in 2025, with the cost of money decreasing in Europe and the US.

Geopolitical Tensions

For investors, it’s clear that gold remains the world’s foremost haven asset. The recent escalation of conflicts in the Middle East, rising tensions among major global powers, and increasing geopolitical uncertainties have collectively heightened demand for bullion. 

This general deterioration in the geopolitical landscape reinforces gold’s role as a hedge against market instability. All those matters will also remain a key point in 2025.

Central Bank Demand for Gold

Central banks continue to significantly increase their gold reserves, making this asset an increasingly important component of their holdings. Notably, BRICS nations are expanding their gold assets as part of a broader de-dollarisation strategy. 

While the People’s Bank of China stopped buying gold a few months ago, the net buying trend remains strong. This sustained accumulation contributes to the ongoing rally in gold prices.

Moreover, commentary about the possibility of a gold-backed BRICS currency is further pushing investors to increase the presence of bullion in their portfolios.

Gold Price Analysis

The gold price chart for the first ten months of 2024 illustrates a clear bullish trend, with prices increasing by approximately 35% without major retracements. Volatility has generally remained controlled, supported by strong demand as investors continue to buy on dips.

After starting the year just above the $2,000 mark, gold prices experienced a significant rally in March and April, surging to the $2,350–$2,400 range. After consolidating for a couple of months, the bullish momentum returned with even greater impetus in the final part of the summer, propelling the spot price above $2,700.

From a technical point of view, a bullish channel has been evident since August, with prices consistently rising whenever they touch the channel’s lower boundary.

Bullion could find substantial support zones to cushion any sell-off in the event of a decline. The first support area is around $2,600–$2,610, corresponding to the peak reached at the end of September, followed by support at $2,520. Further down, additional support levels are at $2,475, $2,420, and $2,280.

The previous all-time highs of $2,140 in late 2023 and $2,080 before that now seem like distant memories, as the price remains firmly in a bullish trend. However, it’s important to remain cautious, as markets can quickly change direction.

Gold Price Forecast for 2025

What are analysts predicting for gold in 2025? The overall scenario remains positive, with many reports coming from major retail banks predicting gold will extend its record-breaking price rally next year.

Recently, Citibank noted that the global economy is expected to slow down, accompanied by further interest rate cuts, while central banks will likely remain net gold buyers.

Reuters reported that Goldman Sachs analysts had a similar view: 

“We reiterate our long gold recommendation due to the gradual boost from lower global interest rates, structurally higher central bank demand and gold’s hedging benefits against geopolitical, financial, and recessionary risks”. 

According to the bank, gold prices could surpass $2,900 an ounce in early 2025, driven by rising demand for gold-backed ETFs and dovish central bank policies. Bank of America also maintains a bullish outlook on gold, expecting prices to reach $3,000 an ounce in 2025, reaffirming the target announced a few months ago.

Citations

• December outflow compounds 2023 losses | World Gold Council
• CME FedWatch Tool – CME Group