Gold surged 27% in 2024: What investment opportunities lie ahead for 2025?

Gold Prices Surge: How Can the "Star Asset" of 2024 Continue Its Success?Regular foreign exchange trading process

In 2024, gold attracted global attention in the commodities market with its remarkable increase. London spot gold rose by 26.8% over the year, while the main contract for gold futures on the Shanghai Futures Exchange saw an even more impressive gain of 28.2%. This annual performance placed gold at the forefront among major asset classes.

Experts point out that the primary factors driving the surge in gold prices in 2024 include adjustments in U.S. Federal Reserve policies and complex geopolitical issues.

Federal Reserve Policies and Safe-Haven Sentiment

The frequent interest rate cuts by the U.S. Federal Reserve in 2024 were the main drivers of the unilateral rise in gold prices. With the Fed's early-year announcement to halt interest rate hikes, expectations for monetary policy easing surged, igniting a robust rally in gold prices. Starting in October, expectations for further rate cuts intensified, steering the gold bull market into a new phase.

Simultaneously, political changes in the United States provided strong momentum to the gold market. The dramatic developments of Trump winning the 2024 election and maintaining strong poll numbers following a shooting incident in July spurred global financial markets' safe-haven sentiment, driving another powerful gold price rally. Additionally, the prolonged Russia-Ukraine conflict and escalating Israel-Palestine tensions heightened global investors' awareness of geopolitical risks, boosting gold's appeal as a safe-haven asset.

Geopolitical Issues and Reassessment of Gold Demand

In 2024, geopolitical risks remained elevated, particularly with escalating conflicts between Israel and various Middle Eastern countries and dramatic changes in the Syrian situation, further fueling bullish enthusiasm in the gold market. Meanwhile, central banks globally, especially those in emerging markets, have been increasing their gold reserves, providing new support for gold's value.

Zhan Dapeng, a senior analyst of precious metals at Everbright Futures, said: "The gold market in 2024 has many similarities with 2010. After stabilizing in February, gold prices embarked on a 9-month upward trend, experiencing only brief fluctuations from April to July, but showing strong monthly growth overall."

Cooling Consumer Market: High Gold Prices Make It Unattainable for Some

Despite repeated record highs for gold prices in 2024, the retail side seemed quiet. Several gold shops reported that as prices rose, consumers' purchasing power significantly decreased. Some consumers even opted to sell gold bars or jewelry purchased earlier to lock in profits and hedge against potential future price decreases.

The sluggish business for gold shops reflects weakened downstream consumption. With the overall slowdown in consumption growth in 2024, the demand for gold and silver jewelry declined year-on-year. Moreover, high gold prices have dampened retail market enthusiasm. Even approaching the Chinese New Year, a traditionally strong consumption season, hasn't fully reversed this trend.

Outlook for Gold Investment in 2025

Looking ahead to 2025, uncertainties persist in the gold market. Investors should pay close attention to the U.S. Federal Reserve's monetary policy directions and global geopolitical developments. Additionally, after experiencing a substantial price rise, gold may face a correction pressure, with heightened short-term volatility likely.

Nonetheless, gold’s intrinsic value as a safe-haven asset remains significant. For investors, timely market engagement and a focus on risk management will be crucial for gold investments in 2025.

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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