Why gold dominates investments in 2024 and could climb further in 2025

© Capital

– Will gold continue its meteoric rise?

Always higher. Forget American stocks, oil or even German bonds. To date, it is today a precious metal as old as time, gold, which presents itself as the best investment of 2024, with a performance of around 35% since the start of the year. To put it simply, a gram of gold bought for 60 euros on January 1 was sold at the end of October for almost 83 euros. For comparison, the shares of the 500 largest American companies – on the S&P 500 index – have posted a performance to date of 21.5%.

With only two months to go before the end of the year – and yes, already – there is therefore a strong chance that gold will take the lead on the podium, and its meteoric rise could even continue in 2025: currently trading around 2 500 euros, “it is not impossible that an ounce of gold (around 38 grams, Editor’s note) will reach 3,000 euros in the coming months”says Alessandro Soldati, founder and CEO of Gold Avenue. In other words, it is a priori not too late to put gold in the coffer in the hope of a capital gain in the long term. Three major factors should indeed continue to push gold towards historic heights.

The gold rush shows no signs of ending

Firstly, the start of a cycle of reductions in key rates by central banks (European Central Bank (ECB), American Federal Reserve (Fed), Central Bank of China, etc.), which should continue with the decline in inflation. A decision which has a direct impact for individuals: the drop in returns on their secure savings (bank accounts, term accounts, government bonds, etc.). Gold, “When safe investments yield less, investors shift to other assets that seem just as safe and profitable to them, such as gold”points out Alessandro Soldati. A shift that should continue to push demand for gold, and therefore its price.

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Historically, the demand for gold is also systematically stimulated in times of geopolitical uncertainty. Recently, the sovereign debt crisis in Europe (2012), Covid-19 (2020) and the outbreak of war in Ukraine (2022) have corresponded to peaks in the price of the yellow metal. However, in terms of uncertainties, the coming months should continue to be busy: Russo-Ukrainian war, conflict in the Middle East, trade confrontation between China and the United States… Not to mention the potential shocks that could trigger the possible election of Donald Trump. Gold therefore has, from this point of view, still potential good days ahead of it.

Finally, a series of other factors also boost demand for gold more regularly. Its massive purchase by central banks, for example. If the share of gold in their reserves had fallen for decades, it is on the rise again, reaching 11% in 2023, its highest level in twenty years”notes economist Philippe Crevel in his weekly letter. It is in fact a way for these institutions to “protect against geopolitical and economic risks.”he recalls. We also notice, in Asia, a craze among individuals: the Chinese and Indians are, for example, responsible for half of physical gold purchases in 2023. Without forgetting the needs of the industry: in 2023, jewelry and industry (high technology, telephony, etc.) represented 55% of gold demand at the global level. In short, the brilliance of gold has not finished shining.