In this monthly letter, you will find an update on the performance of gold as well as several news and analyzes on subjects that influence the price of the yellow metal.
What to remember from the past month
- Gold Perf: +34% in 2024
- +9.39% per year since the launch of the euro!
- Central bank purchases + Geopolitics + rate cuts carried the price
- One of the best assets of 2024
- To watch in 2025: Trump 2.0, public debts, geopolitics
- Optimistic forecasts for 2025
+34% in 2024
The yellow metal ends the year 2024 up 34%, with a price at the morning fixing in London, on December 31, of 2508.24 euros per ounce. The year was marked by a series of records, with a closing high of 2589.85 euros per ounce reached on November 22, and an all-time session high of 2607 euros the same day.
The European investor also benefited from the rise in the dollar against the euro. Over the year, the price of the yellow metal appreciated by 25.6% in dollars, closing at $2,610.85 per ounce and the greenback appreciated by almost 9%.
Over the longer term, this is the 3rd best annual performance for gold since the launch of the euro. It is particularly remarkable that the yellow metal achieved a performance similar to 2010, the post-2008 crisis year and the year of the European sovereign debt crises.
Since the launch of the euro 26 years ago, the price of gold has multiplied by more than 10, which represents an annualized performance of 9.39% per year.
Alignment of the planets
This excellent 2024 performance can be explained by the combination of several factors. First there was the strength of Chinese demand, which mainly materialized in the spring and took the price towards records. The context of economic slowdown and reduction in American key rates also supported the price throughout the year.
Central bank purchases were sustained, although down compared to 2023. They are still driven by the desire of countries to “dedollarize” and thus no longer be subject to the risk of economic sanctions via the note. Green. Among the most active countries are Poland (+90 tonnes), India, China, Turkey, the Czech Republic, Hungary, Qatar, etc. It should also be noted that part of central bank purchases is probably not declared for strategic reasons.
Geopolitics continued to drive the news and reinforce the appeal of gold as a safe haven. The Ukrainian conflict has reached a new milestone in the East-West confrontation, with the sending of North Korean soldiers, and the authorization to use Western weapons to strike Russia in depth. The conflict in the Middle East has been intense, reaching a climax with missile launches between Israel and Iran in October.
Politics also held an important place with the American election and the clear victory of Trump, which contrasts sharply with the political chaos in Europe and particularly in France and Germany. This context has also revived fears about sovereign debts, with in particular a downgrade of France’s rating in December.
Gold, the best asset of 2024
-This performance
ormance and this context make gold one of the best assets of 2024. The yellow metal easily beats stocks, in particular French stocks with a CAC40 which shows a decline of -2.05% over the year. With a slightly negative correlation over the year, gold has provided useful diversification by appreciating when stocks have stalledespecially in spring. This validates by example the role of gold in protecting portfolios.
In the United States, where the indices are driven by big technology stocks and the AI boom, the performance of shares was significantly higher (+23%).
The return on euro life insurance funds is expected to be between 3.5 and 4%, and bond funds have returned around 3%. Only cryptos did better than gold with an impressive performance of bitcoin of +127% over the year, driven by the election of Trump and his pro-crypto positions, as well as by the launch of several funds.
2025: what to watch for
In 2025, we will have to pay attention to the tone of the Trump presidency, in particular his policy on international trade. New tariffs could create a trade war, weigh on growth and fuel inflation, which could prove positive for gold.
On the geopolitical side, we will of course monitor the evolution of the war in Ukraine. Trump’s positioning and his tone towards Putin will be decisive and could encourage the protagonists to more daring maneuvers.
On the economic side, the question of public debts will come back to the forefront, particularly in the United States with a deficit which is expected to continue to widen.
Finally, it will be necessary to observe the components of demand for the yellow metal and examine to what extent high prices will dissuade purchases, whether from central banks, or from individuals for jewelry.
Analyst forecasts
At a time of forecasts for 2025, many banks and research organizations have delivered their vision for the yellow metal.
BNP Paribas expects new historical records in the first half, and a more contained price in the second. Bank of America is also forecasting new records, above $3,000 per ounce, or nearly 15% appreciation compared to the current price.
For Lombard Odier and DWS, we should expect a positive performance but less than in 2024. Gold should be a good protection in a turbulent year 2025.
JP Morgan is positive on the yellow metal in the long term. His private bank recommends gold in particular due to geopolitical risk and uncertainty around sovereign debts and public deficits. Pictet also sees gold as a way to protect against unanticipated shocks linked to the Trump presidency.
Société Générale has a heavy weighting in gold in its portfolios to protect them from geopolitical risk. BCA Research is also overweight, and recommends buying on a pullback.
Among the more negative views, we find TD Securities, for which the slowdown in demand from central banks, a stronger dollar and rates which are no longer falling argue for a consolidation of the price. Invesco, due to its positive outlook on the markets, does not recommend the yellow metal.
Warning :
The price of gold can vary significantly up or down. The information contained in this document does not constitute an investment recommendation and the reader is invited to seek advice from professionals for the management of their savings.
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