Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
According to its latest 2025 Outlook released on Thursday (December 12), the World Gold Council (WGC) pointed out that gold prices are on track to record their best annual performance in more than a decade, which has already risen 28% through November and hit record highs multiple times.
The World Gold Council believes that in 2024, major central banks entered the interest rate cut cycle has provided support for the rise in gold prices. WGC expects growth in the gold market to moderate in 2025.
The U.S. economy and policy will be an important variable affecting the gold market, according to WGC analysts, while Trump administration’s second term could provide a boost to the U.S. economy, but it could also spark jitters in global markets.
In particular, the potential trade war and inflationary pressures could make economic growth weaker than expected, becoming a major uncertainty for the market.
Analysts at the World Gold Council said that Asian consumer demand has played an important role in the first half of 2024. After a summer rally, western investors entered the market as Asian demand cooled, providing fresh support as the US Federal Reserve begins its long-awaited easing cycle.
Looking ahead, analysts expect the market consensus on key macro variables such as GDP, yields and inflation bring moderate growth for gold in 2025. The upside could come from stronger-than-expected central bank demand or a rapid deterioration in financial conditions leading to a flight to safe haven assets. At the same time, the reversal of monetary policy, resulting in higher interest rates, could pose challenges.
Analysts emphasized that a major risk for gold next year remains Trump’s uncertain economic policies, including the possibility of pushing the global economy into a trade war.
Economists already said that higher trade tariffs could push up already high inflation, which could affect the Fed’s current monetary policy stance. The market has already started to scale back expectations for rate cuts in 2025, with Bank of America predicting only two cuts next year and Wells Fargo expect only one cut.
WGC analysts noted that when the Federal Reserve maintained its restrictive monetary policy in the first half of 2024, Asian consumer interest helped push gold prices to record highs. India’s gold demand benefited from lower import duties in the second half of the year. However, the risk of a trade war is growing. China’s economic weakness means that consumer demand may not play a significant role in supporting gold prices in 2025.
The World Gold Council expects central banks to continue buying gold in 2025, though the pace of purchases could be slower than in recent years.
The report concluded that potential factors expected to drive gold prices higher in 2025 include greater than expected central bank demand and a “sharp deterioration” in financial conditions that could trigger risk aversion among investors.
