Gold is on track for its best annual performance in over a decade, with a notable increase of 28% through November 2024. Central bank and investor buying have played a significant role in offsetting weaker consumer demand for gold. Gold's remarkable performance can be largely attributed to its role as a hedge against market volatility and geopolitical risk. As we look ahead to Trump's second term, the global economy faces a complex landscape of opportunities and challenges. While initial market enthusiasm may benefit risk-seeking investors, the longer-term outlook is more nuanced.
The outlook for gold in 2025 appears cautiously optimistic, with expectations of positive but more modest growth compared to its stellar performance in 2024. This projection is based on market consensus regarding key macroeconomic variables such as GDP, yields, and inflation. A reversal in monetary policy leading to higher interest rates could however pose challenges for gold in 2025. Higher interest rates t…