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– The price of gold still seems to have a bright future ahead of it, according to our columnist.
The performance of gold will have been one of the biggest surprises of 2024 on the financial markets: up around 30% since the start of the year, it is well ahead of bonds or even stocks, and has thus gained short most analysts. At the start of the year, when the price of gold was hovering around $2,000 per ounce, professionals interviewed by Bloomberg anticipated a stabilization of the price of gold, since the year 2023 had already been very buoyant (the price of gold metal had gained 13%). Today, an ounce of gold costs around $2,700 (nearly 2,500 euros).
The golden metal benefited from a real alignment of the planets in 2024. Geopolitical tensions and a busy electoral calendar have once again highlighted gold’s quality as a safe haven par excellence. The desire of many Central Banks to reduce their dependence on the dollar has encouraged them to massively increase their gold reserves. The prospects of reductions in key rates from the Fed or other major central banks have made bonds less attractive, favoring the gold metal. And individuals, particularly in Asia, have turned to gold to save, in the absence of other secure financial products. After such a price rise, it would be reasonable to think that the demand for gold is running out of steam. The figures recently published by the World Gold Council show that this is not the case.
In the third trimester, 1,313 tonnes of gold were purchased worldwideup 5% from last year and marking a record level for a third quarter. Jewelry demand, traditionally sensitive to price variations, was declining. On the other hand, demand from industry remained robust. Gold is used as an electronic component, and the activity is currently supported by the rise of artificial intelligence. Central bank purchases have been reduced slightly, notably because China has not purchased gold since May, perhaps in reaction to the rapid increase in prices. But other Central Banks (in Eastern Europe in particular, or India and Turkey) remain very active on the gold metal market and their cumulative purchases remain significant (186 tonnes in the 3rd quarter). On the investment gold side, we note the strong comeback of professional investors, who had largely abandoned the gold metal when interest rates were high but are once again increasing the share of gold in their portfolios.
Why the price of gold is soaring and expected to soar further in the coming months
An ounce at $3,000 in a year?
Among individuals, several opposing trends. In Asia, where gold is one of the preferred means of saving (for both cultural and financial reasons), demand remains strong. In Western countries, many gold holders took advantage of the price rise to take their profits. But gold’s performance has not gone unnoticed and the golden metal seems to have gained new fans. This trend is perfectly illustrated by the resounding success experienced by Costco supermarkets, an American wholesaler which launched into the sale of precious metals (alongside therefore food, cleaning or household appliance products) there. a little over a year old. American consumers flock to these products with each new supply and the brand has now extended its offering to silver coins and platinum bars.
So, is it too late to buy gold? Forecasts on gold are particularly dangerous because it reacts to extreme events (economic crisis, war, etc.), which are by nature unpredictable. A few weeks ago, professionals in the sector (producers, refiners, resellers, banks and central banks, etc.) took part in the exercise as part of the annual conference of the London Bullion Market Association. And they are rather optimistic: they predict that an ounce of gold will approach 3,000 euros within a year, another 10% increase. Faced with persistent geopolitical tensions, growing concerns about widening budget deficits and thanks to the Fed’s rate cut, the gold metal would still have new opportunities to shine.
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