The quote from gold continues to set record after record in 2024. Not only because of the price at which each of its ounces are paid, which has set all-time highs countless times in the first 10 months of the year, but also for having reached, so far this year, registering its largest increase since 1979.
Since January 1, the metal has appreciated by more than 32%, which places 2024 as the year successful in this sense since 1979, when the price of the precious metal increased by 125%.
Low real interest rates (especially in the United States), more accommodative monetary policies (both from the Fed and the ECB) and increased market uncertainty in the context of a growing fear of a global economic slowdown, as demonstrated by the global economy. The repercussions that a hypothetical trade war between China and the United States could have, the American elections or the wars in the Middle East and between Russia and Ukraine are some of the factors that helped the price of gold metal thus skyrocketed in 2024.
In this context, investors showed that they saw in gold a way of protect against the uncertainty that threatens the markets in recent weeks and, also, as an optimal way to diversify your portfolios in the face of a scenario of greater volatility in the future. In fact, the gold rush has reached the point where investors are interested Also -alternatively- in company shares mining related to gold metal Due to its strong correlation with the price of merchandise.
“Since 2022, the price of gold has been supported by strong demand, emanating from the jewelry industry (around 40% of demand) and, above all, from the central banks of emerging countries, eager to diversify their foreign exchange reserves”, underlines Charlotte Peuron, fund manager specializing in the precious metals sector at Crédit Mutuel AM, who adds that in addition, “small investors (even from emerging countries) are also keen to protect their savings by investing directly in gold bars and coins.
And Pimco thinks the same thing in its latest cyclical outlook report in which it assures that “the evolving global outlook continues to support gold and precious metals, with emerging market central banks buying gold at unprecedented rate since the Russian invasion of Ukraine.
We should also not forget the US presidential elections, which “are expected to encourage the unnoticed buying of gold by large investors who believe that whoever wins the White House, the US dollar will come under pressure in due to the increase in budget deficits. ” says Carsten Menke of Julius Baer.
Limitless growth?
“We remain positive on gold for the months to come,” says Peuron, stressing that “several central banks have reiterated their interest in increasing their gold reserves and that strong uncertainty persists”, two factors which support prices. gold. However, With this rise, the gold metal remains well above analyst estimates in the short and long term. And their future movements will depend, to a large extent, on What is investor sentiment?
In fact, gold is trading above the levels at which the market consensus that gathers Bloomberg estimates that the ounce of gold will be listed until 2027. Similar cases are those of money and the palladiumwhich are also above analyst estimates and have seen increases so far this year – notably in the case of merchandise silver, which increased by 43% over the year.
“Gold has been in the headlines lately, either due to its revaluation of more than 30% so far this year or because it has reached new all-time highs. However, there is another precious raw material like silver whose price has increased by more than 40% since the year as a whole”, specifies Tressis in this sense, while explaining that behind this extraordinary behavior hides the one of its main characteristics, such as its close relationship with industrial production.
“At the moment, gold’s remarkable rebound appears to have much more to do with momentum and the state of mind of the market which, due to fundamental factors”, underlines Desby Julius Baer, and they point out that it is starting to be seen on the market indicators which invite us to reflect on a certain overheating of the stock markets. In fact, several market indicators are starting to suggest some overheating of stock markets, as fear and greed prepared by CNN (fear and greed index), which marks the levels of “greed”.
“Such extreme euphoria is a sign of alarmbecause it shows a certain distance between prices and fundamental factors,” explains Menke.
Regardless, what is evident is the current investor interest in this commodity, which is reflected in demand for gold ETFs has skyrocketed. The same goes for the monthly net inflows of the two largest gold funds, which exceed the $2.5 billionits highest level since 2022.
