Gold and silver ended 2024 consolidating strong gains, with gold reaching multiple record highs before peaking in October, according to Saxo Australia.
The demand for investment metals has been driven by an increasingly uncertain geopolitical landscape, as global tensions and economic shifts have led investors to seek safer assets.
Ongoing strength in the US dollar and concerns around the tariffs on Australia’s main importers have impacted gold, which ended December at about $4,200 for a monthly gain of 3% and a record annual gain of more than 38.11%.
With the silver price linked to the global economic outlook and increasing uncertainty in some markets, the metal was lower in December although it performed solidly over the year.
Silver started December trading at about US$30.75 and gained briefly to near US$32 before dropping to end the month below US$29. Its price finished 2024 with a 33% gain overall.
Saxo Head of Commodity Strategy Ole Hansen says just two weeks into 2025, this trend of demand for investment metals driven by an uncertain geopolitical landscape, leading investors to seek safer assets shows no signs of abating in the near future.
“Central banks have aggressively purchased gold to diversify away from the USD and USD-based assets such as bonds, indirectly supporting silver prices,” Hansen says.
“Additionally, concerns about persistent inflation and mounting global debt, particularly in the United States, have prompted investors to hedge against economic instability by turning to precious metals.
“However, looking ahead to 2025, investors may need to exercise greater patience. A tug-of-war between rising yields, expectations of delayed rate cuts, and fluctuations in the dollar is likely to result in higher volatility compared to 2024.”
Hansen says silver’s sustained industrial demand is expected to keep it in a supply deficit through 2025 – a deficit that could be deepened by increased “paper” demand via exchange-traded funds.
Silver’s dual role – serving both investment and industrial needs – positions it to potentially outperform gold in the coming year, Saxo’s Head of Commodity Strategy adds.
“As a result, we forecast a decline in the gold-to-silver ratio, currently around 88, toward 75, a level observed earlier in 2024. If this materialises and gold reaches our slightly adjusted forecast of US$2,900 per ounce, silver could trade above US$38 per ounce, both levels well above the cost of carry,” Hansen continues.
As Mining.com.au reported on 6 January, the consensus appears to be that 2025 could be even better for silver, with Peak Asset Management executive director Niv Dagan telling this news service the gold-silver ratio is coming closer together.
The gold-to-silver ratio denotes how many silver ounces are needed to buy one ounce of gold. It shows how many multiples that gold is trading relative to silver. The typical range of gold to silver is between 50 and 70.
It was at 91 at the end of December, the highest level in six months, reflecting gold’s continued over-performance compared to silver.
Meanwhile, opening last month around US$2,650, the gold price was supported by the announcement the Chinese central bank was buying the yellow metal after a six-month hiatus and the demand to settle COMEX contracts with physically delivered metal.
This pushed the gold price above US$2,710 before the meeting of the US Federal Reserve’s Federal Open Market Committee reduced the funds rate by 25 basis points to 4.25% to 4.50%. Although this was expected, it signalled greater caution around the future path of policy into 2025 and triggered a fall to just over US$2,600 by month’s end.
Write to Adam Orlando at Mining.com.au
Images: Supplied & ABC Bullion
