The World Bank has predicted that gold prices will reach new records this year.

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The World Bank reported that global commodity prices are expected to decline to their lowest level in the last five years in 2025 due to an abundance of oil. The bank published the October 2024 issue of the Commodity Markets Outlook Report. The report stated that global commodity prices are expected to fall until 2026.

In the report, it was noted that global commodity prices would decline to their lowest level in the last five years in 2025 due to a large oil surplus that could limit price effects even in the event of a broader conflict in the Middle East; however, it was also recorded that overall commodity prices would remain 30% higher compared to the five years before the COVID-19 pandemic.

OIL LEADS THE DECLINE IN COMMODITY PRICES

The report indicated that after a 3.4% decline in commodity prices this year, a 5.1% drop is expected in 2025 and a 1.7% drop in 2026, which would lead to prices falling to their lowest levels since 2020. The bank's report predicted that global commodity prices would decrease by approximately 10% from 2024 to 2026.

The report emphasized that the anticipated declines are led by oil prices, while increases in natural gas prices and a stable outlook for metals and agricultural raw materials have limited these declines.

The report stated that global oil supply is expected to exceed demand by an average of 1.2 million barrels per day next year, recalling that this is a surplus that has only occurred twice before, during the pandemic in 2020 and during the collapse of oil prices in 1998. The World Bank's report noted that the price of Brent crude oil is expected to average $80 per barrel in 2024, dropping to $73 in 2025 and $72 in 2026.

EXPECTATIONS FOR A DECLINE IN FOOD AND ENERGY PRICES

The report expressed that global food prices are expected to decline by 8.5% this year and by 4% in 2025, after which a stabilization is anticipated, with food prices remaining approximately 25% above the average levels between 2015-2019.

The report indicated that energy prices are also expected to decline by 5.8% this year, by 6.2% next year, and by 2.1% in 2026, stating that the decline in food and energy prices would facilitate central banks' efforts to control inflation.

WARNING ABOUT CONFLICT RISK

The bank's report emphasized that the escalation of armed conflicts could disrupt energy supply and increase food and energy prices, complicating these efforts.

The report pointed out that the likelihood of escalating conflicts in the Middle East poses a significant upward risk for energy prices in the short term, and it could also have potential ripple effects for other commodities.

AVERAGE GOLD PRICE EXPECTED TO BREAK RECORD THIS YEAR

The report stated that the average price of gold, a popular choice for investors seeking a "safe haven," is expected to break records this year and exceed the average of 2023 by 21%.

The report noted that gold, which holds a special position among assets, often rises during periods of geopolitical and political uncertainty, including conflicts, and it is expected that gold prices will remain 80% higher than the average of the five years before the COVID-19 pandemic over the next two years, showing only a slight decline.

The report indicated that due to the weakness in China's real estate sector being balanced by increasing demand for certain metals arising from tight supply conditions and energy transition, industrial metal prices are expected to follow a stable trend in 2025-2026; however, unexpected growth outcomes in China could lead to volatility in metal markets.