Gold as a safe-haven asset

In 2024 gold had it's best year since 2010, its role as a safe-haven asset continues to resonate with traders and investors.

Gold experienced a remarkable surge, achieving its best performance since 2010 with a 27% rise to $2,783.95 per troy ounce. Analysts at major financial institutions like J.P. Morgan, Goldman Sachs, and Citi predict that its price could further climb to $3,000 in 2025 due to various factors. Daan Struyven, head of oil research at Goldman Sachs, says the firm likes gold as a hedge against the risks to the US economic outlook from tariffs and sovereign debt sustainability issues.

Gold is priced in dollars, and so as the pound is falling ($1.211/£1) we currently have gold at a sterling record (£2210), when gold hit it's record high in October 2024, the rate was 1.298, meaning gold valued in sterling was lower than it is today.

The key drivers behind gold's strength don't look to be going anywhere. With Central Banks continuing to add to their reserves. The People’s Bank of China purchased 5 tonnes of gold in November plus 9.3 tonnes in December, marking a consistent return to buying to finish 2024 after a six-month hiatus, but it was Poland that led central bank gold purchases in 2024, with cumulative purchases of 89.5 tonnes.

Add to this the Federal Reserve's interest rate policies for 2025, ongoing Geopolitical tensions and concerns around inflation - the US look to be on track to initiate QE (Quantitative Easing (printing money to pay for debt.)) - which could weaken the dollar, turning investors to gold as a hedge against currency devaluation.

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