It’s been a solid year for precious metals, though not an exceptional one, according to market analysts. Gold saw a 28% increase, outperforming silver stocks and gold and silver stocks, which rose less than 20% year-to-date.
Despite the stock market remaining in a secular bull market, investors have shown limited interest and capital in precious metals outside of gold.
Although gold stocks have underperformed, analysts expect them to experience a significant breakout in 2025.
Markets are eagerly awaiting signals regarding the U.S. economy under Donald Trump and the Federal Reserve’s interest rate strategy for 2025.
Spot gold held steady at $2,632.79 per ounce at 00:24 GMT, up 0.45% for the week. U.S. gold futures remained largely unchanged at $2,653.00.
Gold prices have risen in recent years due to its key characteristics—store of value, reserve currency function, and its role as a safe haven during market volatility.
In 2024, the price of gold rose by around 30% year-on-year (until mid-December). Central bank purchases, especially from emerging markets, strongly fueled demand in 2024.
While central banks bought less gold in the first three quarters of this year compared to the previous year, purchases still exceeded the pre-2022 trend. However, since November 24, a shift in the upward trend has occurred, with greater volatility after the U.S. elections.
The election results, which favor a stronger dollar and a shift towards riskier assets, have weakened demand for gold. The price correction has been limited—by mid-December 2024, gold had fallen 2.5% from November 5, while the U.S. dollar index had risen by 2.8%.
The strengthening dollar in the current macroeconomic environment is contributing to a slowdown in gold prices, as both compete as reserve currencies.
However, tightening geopolitical conditions support the price of gold, which remains a long-term driver of demand. Any shift in the geopolitical landscape, such as changes anticipated under President Trump, could ease the pressure on gold prices.
Currently, the price of gold includes a built-in premium over its estimated fair value, suggesting potential risks, such as the escalation of a trade war between the U.S. and China.
