Gold’s Momentum Surges as Geopolitical Distress Fuels Safe Haven Demand

By Doug Young – 25 December 2024

Introduction

Gold’s value has soared in recent times as geopolitical distress and economic uncertainties continue to plague the global landscape.

Investors are seeking both profit and safety, turning to gold as a safe haven asset. The yellow metal’s momentum has surged, driven by escalating geopolitical tensions and the need for a reliable store of value.

The Macro Backdrop for Gold

As interest rates decline and geopolitical tensions rise, the macro backdrop remains favorable for gold.

Analysts predict that gold’s positive momentum will persist in the short to medium term. The metal’s timeless safe haven appeal contributes to its continued strength in the face of economic uncertainties.

China’s Resumption of Gold Purchases

China, one of the world’s largest gold consumers, recently announced the resumption of gold purchases. This move comes after a seven-month pause in buying as gold prices reached record highs.

The decision underscores China’s understanding of the economic and geopolitical risks, prompting them to diversify their reserves and safeguard against currency depreciation.

Heightened Global Political and Economic Uncertainties

The world is experiencing a rapid unraveling, with geopolitical tensions gripping nations such as Syria, Korea, and the Middle East. The seizure of Syria’s capital, Damascus, and the resulting exile of President Bashar al-Assad in Russia have intensified global political and economic uncertainties.

In light of these events, demand for safe haven assets, including gold, is expected to increase.

Projections for Gold and Silver Prices in 2025

Analysts at UBS project strong prices for both gold and silver in 2025. They anticipate gold reaching $3,000 per ounce and silver surpassing $38, representing over a 20% increase from current levels.

These projections take into account the prevailing geopolitical tensions and the expectation of accommodative monetary policies.

Conclusion

Gold’s remarkable surge in momentum reflects the escalating geopolitical distress and economic uncertainties the world faces.

As investors seek safe haven assets, gold continues to shine as a reliable store of value. With China resuming gold purchases and projections of strong prices for 2025, it is evident that gold’s appeal as a safe haven asset remains robust.