Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
The Federal Reserve released the minutes of its December monetary policy meeting on Wednesday (8 January), with almost all officials believe that upside risks to inflation had intensified.
Most officials said a rate cut in December would be appropriate, and it would be appropriate to continue a gradual move toward a more neutral policy stance if the data perform as expected. Fed is at or near a point in time when it would be appropriate to slow the pace of easing.
After cutting rates in December, the central bank expected to cut rates only twice in 2025. In contrast, in September 2024, the central bank had forecast four rate cuts in 2025.
Gold remained firm after the minutes were released, with the February gold futures contract on the New York Mercantile Exchange last trading at $2,680.50 an ounce, up $15.10.
In addition, data released Wednesday by the ADP Research Institute showed that employment increased by 122,000 in December, the lowest in four months; lower than 146,000 in November. The median forecast of economists surveyed by Bloomberg was for an increase of 140,000. ADP’s data are based on employment data covering more than 25 million U.S. private-sector employees.
The ADP data suggests that the gradual weakening of the U.S. labour market 2024 continued into the end of the year. Fed officials will have to find a balance between this trend and renewed inflation concerns to decide how much to continue cutting rates in 2025 and beyond.
Industry insiders point out that despite the interest rate headwinds, gold may continue to strengthen in 2025.
On 7 January, the People’s Bank of China released official reserve asset data showing that China’s gold reserves stood at 73.29 million ounces at the end of December 2024, an increase of 330,000 ounces from the 72.96 million ounces at the end of November, the second consecutive month of increased holdings.
Since November 2024, the price of gold has gradually moved down from its high level, which has created room for the PBOC to increase its holdings.
The PBOC’s timely increase in gold holdings is expected to alleviate the pressure of RMB depreciation; on the other hand, Trump is about to be formally inaugurated as the new U.S. president, and the trend of anti-globalisation may accelerate again after he comes to power, and the PBOC’s increase in gold holdings in such an environment is also expected to help enhance the flexibility of monetary policy.
Data from the World Gold Council shows that by the end of the third quarter of 2024, global central banks purchased 694 tonnes of gold during the year, which makes a record high. In addition, the position of SPDR GOLD TRUST, the world’s largest gold ETF, also showed continuous growth. Among them, the cumulative net purchase of gold by central banks in October 2024 was 60 tonnes, the single-month peak of the year.
The World Gold Council pointed out that more and more developed countries central banks are joining the camp of increasing gold holdings, such as Singapore, the Czech Republic, Poland, etc., all have begun to increase their gold reserves because of the escalation of international geopolitical risks, asset allocation diversification and other factors.
UBS expects that as central banks (especially in emerging markets) continue to increase gold reserves, coupled with the decline in U.S. interest rates and ETF demand rebound, will drive spot gold prices higher. UBS predicts that by the middle to the end of 2025, the price of gold will rise to $2,900 per ounce.
