On the last trading day of the month, quarter, and year, gold prices continued to rise. Nymex February gold futures rose $22.80 to $2,640.90 an ounce on Tuesday. Gold is up 27% for the year 2024, its best year in the past 14 years.
Despite the downward trend since Trump’s election victory in early November, gold remains one of the best-performing commodities in 2024. It’s worth noting that gold’s strong rally this year, in the face of bearish factors such as a stronger dollar and rising real Treasury yields, could signal that market dynamics are changing.
Before Tuesday’s close, the yield on the benchmark 10-year Treasury note was about 4.6%.
David Scutt, an analyst at StoneX Group Inc., said in a note that the performance of precious metals this year seems to be telling investors that the rules of the game in the gold market have changed.
Chantele Schieven, head of Research at Capitalight Research, said in a recent interview with Kitco News that despite the current market weakness, gold can still stabilize in a difficult environment. She noted that the decline and subsequent consolidation since the October high is the first major correction in precious metals this year, which is healthy for the market going forward.
A year ago, Schieven was the most optimistic of analysts surveyed for the London Bullion Market Association’s annual forecast survey. Looking ahead to 2025, she believes gold still has a lot of upside, but the current consolidation could last several months. Gold is expected to trade between $2,500 and $2,700 in the first half of 2025, but is expected to exceed $3,000 per ounce in the second half of 2025.
Justin Low, currency analyst at ForexLive, said gold has historically done its best in January, but a strong rally in 2024 and the Federal Reserve’s changing interest rate outlook could make this year a different story.
The hawkish stance of the Fed at the December meeting kept the dollar in a strong position. However, the enthusiasm of Chinese people buying gold ahead of the Lunar New Year and the resumption of gold buying by the People’s Bank of China should support prices.
Analysts at TD Bank said this week that a Trump presidency would mean higher inflation in the United States and slower global growth. Central banks will have to adjust quickly. Considering the impact of the Federal Reserve’s monetary policy on gold, the change in interest rate expectations will bring some short-term resistance and volatility to the precious metal.
Bank of America analysts expect the Federal Reserve to cut interest rates less in 2025, thus supporting the dollar, which will pose another major headwind for gold. However, analysts still expect gold prices to move higher before the end of the year and even break above $3,000 an ounce.
Bank of America commodities analysts note that gold’s correlation with bond yields and even the dollar has broken down as central banks continue to buy large amounts of gold. At the same time, Trump’s tariff policies and geopolitical uncertainty will further accelerate the de-dollarization trend underway by many emerging market central banks.
