More Stories

Informist, Thursday, Dec. 12, 2024

 

MUMBAI – Prices of gold, which have risen 28% so far this year until November and are poised for the best annual performance in more than a decade, are likely to show only a modest increase next year, the World Gold Council said in 'Gold Outlook 2025'. Gold's role as a hedge against rising market volatility and geopolitical risk most likely explains its remarkable performance in 2024, the council said in the outlook.

 

"Gold is having a record-breaking year due to a confluence of factors, driving the gold price and demand to record levels. And while the current consensus on global economic performance suggests that gold could move sideways, the uncertainty surrounding the geopolitical landscape could provide a springboard for gold next year," Juan Carlos Artigas, global head of research, World Gold Council, said.

 

"2025 is set to be marked by evolving fiscal and economic policies that may result in shifting global dynamics. For gold, 2025 will be a tale of two halves – first, we may experience more risk-on appetite as we wait for strategic and tactical drivers to unravel, leading to more clarity and direction for gold’s performance later in the year," Artigas said.

 

The council said a more dovish US Federal Reserve would be beneficial for gold, but a prolonged pause or policy reversal would likely put further pressure on investment demand. The yellow metal delivered an average 6% return in the first six month of a rate cut cycle, but subsequent performance has been influenced by the length and depth of that cycle.

 

Market consensus suggests that the Federal Reserve will deliver 100-basis-point cuts in 2025, with inflation softening but still remaining above target.

 

The stronger-than-expected demand from global central banks, or a rapid deterioration of financial conditions leading to flight-to-quality flows may drive gold prices higher, the WGC said. It expects global central banks buying to continue next year and sees demand crossing 500 tonnes, which will have a net positive effect on performance. However, a deceleration below that level could put additional pressure on gold.

 

Price of the yellow metal would also be influenced by demand from top consumers China and India, which accounts for 60% of annual demand (excluding central banks purchases) and their contributions to gold performance cannot be understated, it added. "We also expect global central bank demand and Asian markets to continue playing a pivotal role," Artigas said.

 

The actions of the Fed and the direction of the US dollar will continue to be important drivers for gold. However, gold’s final price performance would depend on the interaction of four key drivers, such as economic expansion, risk and uncertainty, opportunity cost, and momentum, the report said. End

 

Reported by Sandeep Sinha

Edited by Deepshikha Bhardwaj

 

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.