The year 2024 has left gold investors in high spirits, whether they’re tracking its value in USD or PLN. As December comes to a close, gold has delivered a remarkable 30% return in both currencies, providing an impressive alternative to the Warsaw Stock Exchange Index (WIG), which, despite including dividends, has remained flat this year. With gold proving to be a stellar performer, the question on everyone’s mind is: can 2025 replicate this success?
A Year of Records
2024 will go down in history as a year of spectacular gains and record-breaking prices in the gold market. In addition to delivering exceptional returns, gold has reached unprecedented highs, cementing its status as a safe-haven asset.
The previous all-time high for gold was set in 2011 at $1,920 per ounce. While gold hovered around this level in the following years, only slightly exceeding it, the market remained stagnant. That changed in February 2024, when gold broke out of its sideway trend and embarked on a rapid ascent. Each month brought new highs, culminating in October when gold peaked at $2,790 per ounce. Although the market has since stabilized, 2024 will forever be remembered as the year of gold’s record-breaking rise.
This year’s returns also outpaced inflation, further delighting gold holders. In Poland, the annual Consumer Price Index (CPI) rose by 4.7%, meaning gold not only preserved wealth against inflation but also enhanced its holders’ purchasing power.
“2024 was an extraordinary year for the gold market. It reaffirmed gold’s reputation as one of the most stable and reliable assets during uncertain times,” commented Aleksander Pawlak, President of Tavex. “We’ve also seen growing interest in smaller denominations of gold bars and coins. Products like 1-gram or 0.25-gram bars cater perfectly to customers looking to begin their journey in precious metal investments without significant financial outlays. This year brought not only steady growth but also increased financial awareness among Poles—a trend that fills us with optimism for the future,” he added.
What Awaits in 2025?
As we enter 2025, many are wondering if the year will match the success of its predecessor. However, following a nearly 30% rise in such a short time, the bar is set high for continued momentum, particularly for a traditionally stable asset like gold.
“The fundamental environment remains favorable for gold. Inflation remains unanchored in many countries, global central banks are leaning toward rate cuts, geopolitical tensions persist, and the incoming U.S. Republican administration hints at protectionist policies,” noted Tomasz Gessner, Chief Analyst at Tavex. He emphasized that protectionist trade policies could fuel inflation, further boosting gold’s appeal.
The U.S. fiscal outlook also poses uncertainties. The new administration’s liberal tax approach could strain federal revenue, while planned spending cuts remain unclear. Since approximately one-third of the U.S. GDP is tied to government spending, any imbalance between tax revenue and expenditure could further expand the budget deficit, currently over 6% of GDP. With public debt exceeding $36 trillion (123% of GDP) and annual servicing costs surpassing $1 trillion, this situation could exacerbate financial instability, potentially supporting gold prices.
Gold: A Barometer of Market Sentiment
Throughout history, gold has been a trusted hedge against uncertainty, whether economic or political. This year’s 30% rise reflects investors’ perception of mounting risks, which could fully materialize in 2025. While the future remains uncertain, global capital flows often react to events with delayed consequences, positioning gold as both an investment and a measure of market sentiment.
Gold’s remarkable performance in 2024 serves as a testament to its enduring role in safeguarding wealth during turbulent times. As we look to 2025, gold remains a critical asset for protecting capital and navigating uncertainty.
Source: Manager Plus
