(**promotion blocked** News) - Gold is poised for continued growth in 2025, albeit at a more modest pace than its remarkable performance in 2024, according to Juan Carlos Artigas, Global Head of Research at the World Gold Council (WGC).
Artigas attributed gold's 2024 surge, which saw it hit 40 new record highs, to its dual nature as both an investment asset and a consumer good.
"Gold is a very effective hedge," Artigas told **promotion blocked** News, noting that investors have flocked to the metal amidst rising market volatility and geopolitical risks.
Additionally, robust demand from central banks, particularly in Asia, has bolstered the market.
Looking ahead to 2025, Artigas cautioned that predicting the future of the global economy is fraught with uncertainty, particularly given the unknown impact of a second Trump term.
"There's a lot of uncertainty as to what… policies will be implemented…and those have big question marks…for both local and for global investors," Artigas said. "This is where the volatility aspect … would start to put gold more in the forefront of investors' minds."
The WGC outlines three potential scenarios for gold in 2025:
- Range-bound with slight upside: This scenario assumes current market consensus expectations for interest rates, inflation, and growth hold true.
- Downside pressure: This scenario could materialize if interest rates remain high or rise further, dampening investor appetite for gold. Weak economic growth could also negatively impact consumer demand.
- Significantly higher: This scenario is predicated on heightened market volatility and geopolitical risks, prompting investors to seek safe-haven assets like gold.
For insights into these three scenarios and the likelihood of each one, watch the video above.
One black swan event that could unravel fast in 2025 is the sovereign debt crisis, Artigas added.
"There are trends that are worrying, including the fact that overall levels of sovereign debt have been been increasing. The ability of many governments to keep up with this type of spending and how to get funding has become difficult," he said. "One of the things that we learned from the aftermath of the global financial crisis is that when these things unravel, they tend to be very fast."
Artigas emphasized that gold's performance in various currencies highlights its role as a hedge against inflation and currency debasement. For instance, gold's return in the Turkish lira was a staggering 50% year-to-date, driven by the lira's depreciation against the U.S. dollar.
While Western investors have lagged behind their Eastern counterparts in gold purchases, Artigas observed a shift in the second half of 2024. "We also started to see Western investors come into the market," he said, attributing this to central bank rate cuts, which lowered the opportunity cost of holding gold.
Artigas highlighted the importance of central bank demand for gold, noting the significance of China's central bank resuming gold purchases in November after a six-month pause, underscoring the widespread appeal of gold among central banks globally.
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