In the coming months, gold may outperform stocks in terms of return on investment, as suggested by contrarian analyses. The key factor is the difference in investor sentiment – the gold market is characterized by moderate optimism, while the stock market is nearing record enthusiasm. Sentiment indicators, such as HGNSI for gold and HSNSI for stocks, confirm these differences, which, according to contrarians, increase the potential for gold’s growth.
In 2024, both gold and stocks yielded similar return rates – the ETF SPDR Gold Shares increased by 28.1%, slightly ahead of the ETF SPDR S&P 500 (SPY) with a result of 28%. High optimism in the stock market limits the potential for further growth in the short term, while gold still has a “wall of worries” to overcome, which can favor its price growth.
Despite recent declines in gold prices – from a record $2800 per ounce in October to around $2650 – forecasts for 2025 remain optimistic. Capital Economics predicts an increase in gold price to $2750 per ounce, supported by demand recovery in China, further purchases by central banks, and global fiscal stability concerns.
Factors such as a strengthening dollar or higher interest rates may temporarily limit growth, but are unable to completely stifle demand for gold. Historical data show that gold and the dollar can rise simultaneously, depending on balancing market influences.
Factors supporting the rise in gold prices:
1. Investment demand in China: Economic woes, such as property market weakness or growth slowdown, boost interest in gold as a hedge.
2. Central Banks: Countries endeavoring to diversify reserves, especially those fearing sanctions, continue to buy gold intensively, albeit at a slower pace than in record years.
3. Concerns about fiscal stability: The increasing global debt and decreasing confidence in fiat currencies boost the attractiveness of gold as a “safe-haven.”
Despite current challenges like a stronger dollar or rising bond yields, the fundamentals supporting gold remain solid. Increased purchases by central banks (694 tonnes since the beginning of 2024) and sustained investment demand indicate stability in this market. In summary, gold has real opportunities for continued growth in 2025, especially if stock market sentiments deteriorate and global concerns about economic stability intensify. Investors looking for alternative assets may, therefore, find gold an attractive option in the coming years.
Author: Krzysztof Kamiński, Oanda TMS Brokers.
Source: https://ceo.com.pl/zloto-czy-akcje-analizy-wskazuja-na-przewage-metalu-szlachetnego-w-nadchodzacych-miesiacach-30816
