Gold prices hit a record high in 2024 due to the impact of global risks.

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The price of gold per ounce is expected to remain strong in 2025, as it breaks records in 2024 due to increasing geopolitical risks and the Federal Reserve's (Fed) interest rate cut cycle, along with purchases by central banks.

According to information compiled by AA correspondent, gold has been among the best-performing commodities this year.

The price of gold per ounce finished last year at $2,062, and as of December 25, it rose to $2,620, marking an increase of approximately 27% since the beginning of the year. This performance (including these prices) indicates the best return for gold per ounce since 2010.

GOLD BREAKS RECORDS

Gold prices have broken records 40 times on an annual basis, and total gold demand exceeded $100 billion for the first time in the third quarter of the year. In October, gold reached an all-time high of $2,790 per ounce, finishing the month at $2,743 with a value increase of 4.15%. The ongoing Russia-Ukraine war, along with Israel's attacks in Palestine and tensions with Iran, has led to an increase in demand for gold, which is seen as a safe haven worldwide.

As political uncertainties increase ahead of the presidential elections in the U.S. in November, this has also emerged as a factor pushing gold prices higher, while the Fed's interest rate cut cycle, strong demand in Asia, and central bank purchases have supported gold prices throughout the year.

GEOPOLITICAL UNCERTAINTIES INCREASED DEMAND FOR SAFE HAVENS

Gold, known for maintaining or increasing its value during periods of economic uncertainty, market volatility, or rising geopolitical risks, is therefore referred to as a safe haven by most investors.

As tensions in the ongoing Russia-Ukraine war, which has been ongoing since February 2022, have escalated with the mutual use of new missile systems, Israel's attacks in the Gaza Strip and Lebanon have also contributed to uncertainties, increasing demand for gold.

A report prepared by ING indicated that concerns about countries potentially facing sanctions similar to those imposed on Russia have emerged as another factor increasing gold demand.

The U.S. and the European Union had decided to freeze about half of Russia's international reserves held in Western countries.

The World Gold Council's report titled "Gold Outlook 2025: Navigating Interest Rates, Risks, and Growth" indicated that gold prices reached 40 record peaks this year.

The report noted that global gold demand also exceeded $100 billion for the first time in the third quarter, stating, "Investment demand for gold, particularly through over-the-counter transactions, has been supported by the undercurrents of geopolitical risk and volatility in many regional financial markets."

The report stated that Western investors have shown demand for gold due to the central banks' interest rate cut process, making gold one of the best-performing assets this year.

TRUMP'S POLICIES WILL PLAY A SIGNIFICANT ROLE

Responding to AA correspondent's questions about what to expect for gold demand in 2025, ING Commodity Strategist Ewa Manthey stated, "We believe that the combination of safe haven demand and central bank purchases, along with the overall bullish market sentiment, will continue to drive gold to new heights in 2025."

Manthey pointed out that the pace of interest rate cuts by the Fed will play a decisive role for gold following Donald Trump's election as president in the U.S., stating, "The inflationary impact of Trump's policies could lead to fewer interest rate cuts than expected."

Manthey explained that despite a slowdown in central bank purchases in the third quarter, they continued to increase their gold reserves, adding, "Now, the total for the year is likely to fall behind the previous two years. Looking ahead to next year, we expect central banks to remain on the buying side due to geopolitical tensions and the economic climate."

Manthey expressed that they expect gold to maintain its positive momentum in the short and medium term, stating, "In the context of geopolitical tensions, the decline in interest rates and the continued diversification of foreign reserves will create a perfect storm for gold, making the macro environment favorable for precious metals."

Manthey emphasized that policies such as tariffs proposed by Trump and tighter immigration controls could create inflationary pressure, which could limit the Fed's interest rate cuts.

Manthey explained that a stronger dollar and tighter monetary policy could provide some resistance for gold, stating, "However, increasing trade tensions could contribute to gold's appeal as a safe haven. We forecast an average price of $2,760 per ounce for gold in 2025."

EXPECTATIONS OF A YEAR OF CHANGE IN THE GLOBAL ECONOMY

Juan Carlos Artigas, Research Director of the World Gold Council (WGC), pointed out that gold closed the year with records for various reasons. Noting that gold demand reached record levels, Artigas stated, "While the current consensus on global economic performance presents ambiguity regarding gold's movements, uncertainties surrounding the geopolitical landscape could provide a springboard for gold next year."

Artigas emphasized that emerging financial and economic policies could lead to changes in global dynamics next year, stating, "2025 will be a story of two separate sides for gold."

First, while waiting for the resolution of strategic and tactical driving forces, we may experience a greater risk appetite, which leads to more clarity and direction for gold's performance throughout the year. This could indeed be true if there is a significant drop in interest rates or a noticeable increase in market volatility, further increasing investor interest. We expect global central bank demand and Asian markets to continue to play a significant role.