Gold Forecast $2538 for New Year 2025
Wednesday, 7/03/2024 12:41
Geopolitics, not democratic elections, are driving the gold price...
FORGET democracy,
writes Adrian Ash at BullionVault.
Geopolitics will drive the gold price to new record highs by 2025.
Says who?
Says the hundreds of BullionVault users responding to our mid-year survey in late June.
Finding 9-in-10 of our global client base in Western Europe and North America, we have been asking BullionVault users for their motives, concerns and price outlook every six months since December 2014, starting with readers of our
Weekly Update research emails.
That makes our survey by far the largest, longest and most consistent of Western private investors who hold precious metals in their portfolio.
This summer's poll, asking about the second-half 2024 outlook, ran from 12th to 25th June. It received 1,665 full responses from across BullionVault's global client base, including from 776 UK users.
And on average, our respondents forecast that gold bullion prices, after setting a run of new all-time highs already in 2024, will rise a further 11.2% by year-end...
...topping $2500 per Troy ounce for the first time ever as the bells chime in 2025.
Gold $2583 to be precise. Which looks a worthwhile prediction, given our users'
success in calling gold's 2023 price outcome and their early success in calling 2024's full-year gains, albeit six months ahead of schedule.
So what about the politics?
This year brings a packed calendar of democratic elections. From India to Uruguay, Iran to the USA, over 2 billion in 2024 get to put their X next to the leader of their choice...
...using the signature of illiterates, the sick and the majestic
throughout history.
Many of this year's votes have already sent things sideways, if not upside down.
Narendra Modi
lost his majority in India. Mexico elected its
first woman president, Claudia Sheinbaum. Emmanuel
Macron lost so badly in June's European elections, he called a snap election for the French parliament to try embarrassing his 'far right' opponents...
...only to suffer
another wipe-out on record turnout so far instead.
But while financial markets have wibbled and wobbled in response, India's Sensex has already recovered its
Modi election-news plunge and set fresh all-time highs (just like
the godsend himself
predicted). Mexico's steep currency and stock-market drops extend
what the wider region is suffering (the BMV IPC hit new record highs earlier in 2024 under
Sheinbaum's equally left-wing and more populist predecessor AMLO). France's borrowing costs have also eased from the 8-month high hit after Le Pen's National Rally won last weekend's first-round vote, while
the CAC40 index has rallied together with bond prices.
So while much of the media appears surprised by the direction of democratic politics, the fact is that financial markets – and most notably safe-haven gold – have been little moved by the 'shock' events above...
...just like bullion prices didn't move on Donald Trump's clear win over Joe Biden in last week's US presidential debate.
All this contrasts with the UK's 2016 Brexit referendum result, when
gold leapt 22% in British Pound terms inside 6 hours and the MSCI World Index of major-economy stock markets sank 4.9% against the Dollar. It also marks a clear break from the news of Trump's first White House victory that November, when gold spiked by 6% against the Dollar only to fall hard by the time he took office the following January as the S&P500 rose by more than 6%, on its way to
rising in all but one of the 12 months in 2017, something never achieved before or since (so far).
The difference? Shock, in a word.
Brexit and Trump 1 weren't the consensus forecasts in 2016. (Hell, they
weren't even consensus among the UK or
US electorates either.) Whereas in 2024, National Rally has been
growing its share of French votes for well over a decade, and
Melania Trump has no doubt kept the measurements for
new carpets and drapes from her first stint as First Lady.
What's more, the odds of a political 'shock' today are vanishingly small, thanks to
the genuine and relentless geopolitical shocks which the 2020s keep delivering.
From Covid lockdowns to near double-digit inflation, and from Russia invading Ukraine to Hamas pouring across Israel's border (and Israel flattening Gaza in response) things that voters and the financial markets never saw coming just keep coming.
Really, what does a turn to the 'far right' matter among French voters after that? Or the 'shock' of a convicted felon winning the White House?
But politics do still matter for gold, according to our latest survey. Just not democracy.
Over half of UK investors (52.6%) believe that Thursday's General Election won't impact the price of gold. Nor will the US election in November have any sway over the gold price according to 2-in-5 investors worldwide (40.7%).
Instead – and in contrast to those domestic democratic ballots – it's the politics between different countries, regions and alliances that count for the direction of gold prices in the second-half of 2024. Or so the world's largest single pool of private citizens investing in precious metals say, polled by the world-leading marketplace which they use.
Geopolitics is seen as the No.1 driver of precious metals prices between now and New Year.
Landing 29.7% of all responses this summer, it topped BullionVault's twice-yearly survey for the first time since the start of 2020.
Behind Geopolitics, one-in-five investors (20.0%) say that Demand for gold will have the largest impact on its price between now and New Year.
That's the strongest-ever showing for market fundamentals – marked as Supply/Demand in our graph above – in 10 years of BullionVault surveys. It comes as a jump in Chinese households buying gold has adding to the relentless purchases being made by emerging-market central banks.
That pushes Monetary Policy – named as the No.1 driver 13 times across 20 surveys to date – into third place (17.1%), its weakest position since New Year 2019.
Bottom line?
This year's global election events might shake up the political landscape for half the world's population. But for safe-haven gold, those elections in themselves won't move the needle.
Moreover, the independent central banks running monetary policy across those democracies (and chosen by their elected leaders, remember) are having less impact on the price of gold and other precious metals than any time in 5 years, too.
Of course, because gold tends to do well when other assets do badly, investing in bullion is often associated with dark times. The ongoing war in Ukraine, the slaughter in Gaza (and the slaughter which spurred it), rising tensions between China and the US over Taiwan, plus rising tensions between China and pretty much everyone else bordering the East or South China Seas, all means that geopolitics is firmly at the forefront of investors' minds...
...and there's little darker than democracy's impact on the world being crowded out by geopolitics as investors trading gold target a record price for the eve of 2025 above $2500 per ounce.
Note: None of this means investors won't respond to domestic politics by buying bullion. More residents of France, for instance, began investing in gold and other precious metals this spring than during any calendar quarter since the start of 2021. Amid the 'shock' of Le Pen's National Rally heading for a parliamentary majority, those
first-time French users of BullionVault also just topped the number in Germany – formerly gold's biggest Western investment market – for the first time in over a decade as well.
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