Gold’s Stellar Year: A Safe Haven in Uncertain Times
As the world grapples with geopolitical tensions and economic uncertainty, one asset class has quietly outperformed the rest: gold. The precious metal has seen a remarkable 28% surge in sterling terms, with prices reaching an all-time high of £2,163 per ounce in late November.
A Record-Breaking Year
Rick Kanda, managing director of The Gold Bullion Company, attributes gold’s stellar performance to economic uncertainty, changes in global inflation, and increased demand. “It’s reached colossal new highs and broken records,” he says. “This is a result of economic uncertainty, changes in global inflation, and also increased demand.”
Geopolitical Uncertainty Drives Demand
Gold has traditionally performed well in times of uncertainty, as investors seek safe havens from jittery equity and bond markets. With a capricious President-elect readying himself for another term, several major conflicts raging into the new year, and inflationary pressures persisting, investors are more likely to consolidate their gold positions than sell out of them.
Sovereign Debt Triggers Demand
Rising sovereign debt is another key driver of gold’s popularity. Western economies have overseen a period of widening government deficits, leading to a trend of de-dollarisation in many non-Western developing economies. Central banks, particularly those in non-Western economies, are reevaluating their commitment to dollar reserves and buying up more gold instead.
Central Banks Lead the Charge
Even though central bank buying slowed in the third quarter of 2024, economists expect central bankers to remain “bullion hungry” in 2025. The Reserve Bank of India and the National Bank of Poland are leading the charge, with 29% of central bank respondents intent on increasing their gold reserves in the next 12 months.
A Bullish Outlook for 2025
With geopolitics set for another febrile year, and inflation looking increasingly embedded in many western economies, many investors are predicting another year of gains for gold. Bullion Vault forecasts gold will reach a high of $3,070 in 2025, with respondents citing geopolitics as the biggest factor driving their interest in the yellow metal.
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