Gold is poised to record one of its most significant annual gains in this century, surging by 27% due to a combination of U.S. monetary easing, persistent geopolitical risks, and a surge in central bank purchases. The precious metal’s rise, which has set a series of new records this year, contrasts sharply with the performance of other key commodities, underscoring a year of mixed fortunes for the broader metals market.
Despite a slight dip since Donald Trump’s decisive victory in November’s U.S. presidential election, gold’s gains in 2024 have outpaced those of most other commodities. While base metals have shown uneven results, with iron ore experiencing a sharp decline and lithium grappling with a deeper slump, gold’s performance stands out as a rare bright spot.
The disparate outcomes among commodities this year reflect the lack of a single, overriding driver influencing the sector. This trend highlights the uncertainty surrounding the outlook for 2025, with investors particularly focused on potential shifts in U.S. monetary policy, geopolitical tensions stemming from Trump’s presidency, and China’s ongoing efforts to revive its faltering economy.
Gold’s exceptional performance, achieved even amid a stronger U.S. dollar and rising real Treasury yields—factors that typically weigh on the metal—could signal a shift in market dynamics. According to David Scutt, an analyst at StoneX Group Inc., the metal’s surge has been nothing short of “remarkable and relentless.” Scutt described gold’s performance as one of his biggest market surprises of the year, suggesting that “the gold game looks to have changed.”
In contrast to gold’s strength, other metals have faced challenges, particularly due to China’s prolonged economic slowdown. The LMEX Index, which tracks six major metals on the London Metal Exchange, is on track for only a modest annual gain, as weak demand from China has been somewhat offset by supply constraints, particularly in copper and zinc. This supply strain could persist into 2025, adding to market uncertainties.
Iron ore has been one of the hardest-hit metals, with the ongoing slump in China’s construction industry—driven by weak steel demand—dragging down prices. Futures for the commodity in Singapore have fallen by approximately 28% over the course of 2024, signaling a continuing crisis in the steel sector, the world’s largest.
Lithium, a key component in battery production, is also set to see a second consecutive steep annual decline. The ongoing global supply glut, compounded by disruptions in the electric vehicle industry, has deepened the challenges faced by the lithium market.
As 2024 draws to a close, the contrasting performances of gold and other metals highlight the complexity of the global commodities market and set the stage for an uncertain year ahead. With significant geopolitical and economic challenges on the horizon, the dynamics of the metals market could undergo further shifts in 2025, leaving investors to navigate a turbulent landscape.
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