Gold prices rose on Thursday, driven by a weaker U.S. dollar and ongoing geopolitical tensions, particularly in the Middle East. Spot gold increased by 0.5% to $2,626.10 per ounce at 0246 GMT, while gold prices in India climbed by ₹20 to ₹77,460 per 10 grams, mirroring global trends.
U.S. gold futures also saw a rise of 0.3%, reaching $2,643.70 per ounce. The dollar index dipped by 0.1%, making gold more affordable for holders of other currencies, further supporting demand for the precious metal.
Market analysts pointed to the geopolitical instability, especially in the Middle East, as a key driver for the rise in gold prices. Brian Lan, Managing Director of GoldSilver Central, noted that if tensions escalate, gold could see further gains.
A Record-Setting Year for Gold
Gold has been one of the strongest performers of 2024, with a 27% increase in value, marking its best yearly performance since 2010. The surge in prices has been fueled by a combination of factors, including Federal Reserve rate cuts, geopolitical risks, and gold’s role as a hedge against inflation and market volatility.
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, highlighted that gold broke 40 record highs in 2024, with total demand surpassing $100 billion in the third quarter. Central banks, especially the Reserve Bank of India, have played a pivotal role, purchasing a total of 745 tonnes of gold by October 2024. India notably increased its gold acquisitions fivefold.
Key Drivers Behind Gold’s Performance
Kothari pointed to five major factors that have supported gold prices in 2024 and are expected to influence trends in 2025:
Monetary Policy: Global central banks eased interest rates in 2024, with the U.S. Federal Reserve making three rate cuts and planning two more in 2025, providing a bullish outlook for gold.
Geopolitical Risks: Ongoing conflicts in the Middle East, the war in Ukraine, and trade uncertainties under former U.S. President Donald Trump continue to drive gold’s appeal as a safe-haven asset.
Inflation Trends: Persistent inflation, particularly in the U.S., supports gold’s role as a hedge against rising prices.
Investment Demand: Sustained inflows into exchange-traded funds (ETFs) and ongoing central bank purchases are likely to underpin gold prices.
Safe-Haven Appeal: Geopolitical instability and economic uncertainties have enhanced gold’s status as a reliable safe-haven asset.
Gold’s Outlook for 2025
Looking ahead, Kothari predicted that gold could reach $3,000 per ounce (approximately ₹85,000 per 10 grams) in 2025, driven by continued demand fueled by geopolitical risks and economic uncertainties.
“Gold remains a chameleon asset, adapting to changes in the U.S. dollar, interest rates, and market sentiment,” said Kothari.
Market strategist Yeap Jun Rong echoed these sentiments, noting that as investors navigate U.S. tariff policies and global monetary easing, gold’s status as a safe-haven asset will continue to keep it in focus for the foreseeable future.
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