As the year draws to a close, gold investors have every reason to celebrate. Both dollar-based and domestic Polish investors are enjoying impressive returns, with gains of around 30% as of late December. This performance has proven to be a solid alternative to the Warsaw Stock Exchange Index (WIG), which ended the year flat, even after accounting for dividends—a luxury gold does not provide. But will 2025 be just as generous to gold enthusiasts?
A Year of Records
The year 2024 will be remembered as a landmark for the gold market, marked by extraordinary growth and record-breaking prices. Beyond the impressive returns, the year also saw gold prices reach all-time highs.
The previous record was set in 2011, when gold hit $1,920 per ounce. From 2020 onward, gold hovered near this level, only marginally improving and moving in a sideways trend. The real breakthrough came in February 2024, when gold prices broke free from this stagnation and began a sharp upward climb. Each subsequent month brought new records, capturing the attention of both investors and media. The peak came in late October, with gold hitting a historic high of $2,790 per ounce. Since then, the market has stabilized, but the year remains synonymous with unprecedented milestones in gold prices.
Notably, gold’s performance also outpaced inflation. In Poland, the Consumer Price Index (CPI) rose by 4.7% year-on-year, making gold a robust hedge against rising prices while also enhancing investors’ purchasing power.
Gold as a Safe Haven
“2024 was an exceptional year for the gold market, once again proving that this metal is one of the most stable and reliable assets in turbulent times,” commented Aleksander Pawlak, CEO of Tavex.
“Despite high prices, we observe increasing awareness among clients who now analyze their investment opportunities and needs more thoroughly. This aligns perfectly with gold’s role as a long-term capital protection tool,” he added.
Pawlak also noted growing interest in smaller gold bars and coins, such as 1-gram or 0.25-gram products, which cater to clients looking to enter the precious metals market without significant financial outlays. “This has been a year of stable growth and greater financial education among Poles—a trend that fills us with optimism for the future,” he concluded.
What Lies Ahead in 2025?
With gold prices up nearly 30% in a single year, many investors are wondering if the coming year will deliver similar results. However, maintaining such growth, especially for a traditionally stable asset with low historical volatility, is a tall order.
Still, the fundamental environment remains favorable for gold. “Persistently high inflation in many countries, a global shift toward interest rate cuts by major central banks, ongoing geopolitical tensions, and the protectionist policies of the new Republican administration in Washington all support gold prices,” explained Tomasz Gessner, Chief Analyst at Tavex.
Gessner also pointed out potential risks, particularly related to the U.S. fiscal situation. The Republican administration’s liberal tax policies may strain federal revenues, while spending cuts needed to address the budget deficit—currently over 6% of GDP—remain uncertain. U.S. public debt, already exceeding $36 trillion (or 123% of GDP), continues to grow, with annual servicing costs surpassing $1 trillion.
Gold’s Role as a Barometer
Gold has always been a safeguard against economic and political uncertainty. The 30% price surge in 2024 reflects the risks perceived by investors, some of which may only fully materialize in the coming year.
While predicting the future remains challenging, it is clear that global capital responds to events with far-reaching consequences. Gold continues to act not only as an investment but also as a barometer of market sentiment and concerns.
2024’s performance underscores gold’s critical role in protecting capital during uncertain times, reinforcing its position as a cornerstone of long-term investment strategies.
Source: Manager Plus
