Gold set for best year since 2010 amid rate cuts, safe haven demand

Gold prices were set to end a record-breaking year on a positive note on Tuesday as robust central bank buying, geopolitical uncertainties and monetary policy easing fuelled the safe-haven metal's strongest annual performance since 2010.

Spot gold rose 0.1 per cent to $2,607.72 per ounce as of 1315 GMT, while US gold futures gained 0.1 per cent to $2,620.40.

As one of the best-performing assets of 2024, bullion has gained more than 26 per cent year-to-date, the biggest annual jump since 2010, and last scaled a record high of $2,790.15 on Oct. 31 after a series of record-breaking rallies throughout the year.

 

"Rising geopolitical risks, demand from central banks, easing of monetary policy by central banks globally, and the resumption of inflows into gold-linked Exchange-Traded Commodities (ETC) were the primary drivers of gold's rally in 2024," said Aneeka Gupta, director of macroeconomic research at WisdomTree.

The metal is likely to remain supported in 2025 despite some headwinds from a stronger US dollar and a slower pace of easing by the Federal Reserve, Gupta added.

The US Fed delivered a third consecutive interest rate cut this month but flagged fewer rate cuts for 2025.

Donald Trump's incoming administration was also poised to significantly impact global economic policies, encompassing tariffs, deregulation, and tax amendments.

"Bullion bulls may enjoy another stellar year ahead if global geopolitical tensions are ramped up under Trump 2.0, potentially pushing investors towards this time-tested safe haven," said Exinity Group Chief Market Analyst Han Tan.

Bullion is often regarded as a hedge against geopolitical and economic risks and tends to perform well in low-interest-rate environments.

"We expect gold to rally to $3,000/t oz on structurally higher central bank demand and a cyclical and gradual boost to ETF holdings from Fed rate cuts," said Daan Struyven, commodities strategist at Goldman Sachs.

Spot silver fell 0.3 per cent to $28.85 per ounce, palladium was steady at $901.03 and platinum was little changed at $904.23.

Silver is headed for its best year since 2020, having added nearly 22 per cent so far. Platinum and palladium are set for annual losses and have dipped over 8 per cent and 17 per cent , respectively.