After dropping nearly 7% after Trump's win, gold prices have climbed up again, achieving a 27% gain in 2024, the largest annual rise since 2010. Gold value's upward trajectory is seen due to the risk-off sentiment in the market, with many investors turning to gold as a safe haven asset.
In Asia and Europe, for example, a sell-off of equities has been happening with gold becoming a highly preferred safe haven during periods of economic uncertainty. If recalled, both continents have experienced challenging economic states in 2024, with some like China, extending their woes in 2025.
Traders enter 2025 still looking at interest rates in the United States for additional cues that will guide the price of gold, Yahoo Finance reported. The cycle of cutting interest rates by the Federal Reserve was considered the one behind the rising gold prices. Typically, low interest rates turn non-interest-bearing assets, especially metals like Gold, more attractive. With this outlook, central banks of emerging markets started purchasing significant amounts of gold in 2024 as well. which supported the price increase.
US Rate Path and Economic Data
As the new year dawns, market players are closely monitoring signals from the Federal Reserve on its rate-cutting plans. Typically, lower rates are favorable for gold, as they reduce the opportunity cost of holding the precious metal.
Investors are now looking forward to important economic data from the US jobless claims and manufacturing reports for an insight into what the Fed may do next and whether it would bring gold price higher still.
Looking ahead, according to Reuters, analysts are optimistic over the outlook for gold. The continued buying of central banks combined with global political instability and rising concerns over inflation should keep gold near the top of the list for preferred safe-haven investments. That the metal has so far been able to hold its own as economic or geopolitical conditions have worsened makes it an indispensable component of portfolios for many investors.
Starting this new year, experts believe gold's status as a hedge against uncertainty will continue to drive demand, ensuring that it remains a top choice for cautious investors.
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