Golden Prospects: Hedge Funds and Central Banks Support Precious Metal Trends

The gold stocks favored by hedge funds remain in focus, with Pan American Silver emerging as one of the most promising options. A World Gold Council report on December 13 highlights that gold is shining this year with an impressive price increase of 28% compared to previous years. The driving forces behind this growth are primarily strong purchases by central banks and increased investor interest. Looking ahead to 2025, a complex interplay of interest rates, economic growth, and global risks could influence the gold market. It is expected that the U.S. Federal Reserve will cut interest rates by 100 basis points by year-end, with similar steps potentially following from European central banks. These monetary policy measures create a favorable environment for gold. However, challenges such as trade conflicts, inflationary pressures, and disruptions in supply chains could weigh on the precious metal. Global economic conditions, especially in Asia, are also crucial for gold demand. China and India, which together account for over 60% of annual gold demand, remain key markets for the precious metal's long-term prospects. In China, demand is significantly influenced by consumer sentiment and the economic outlook, which could be shaped by government stimulus measures and developments in trade policy. India is already impressing with growth of over 6.5%, giving further tailwind to the gold market. Central banks have remained net buyers of gold for nearly 15 years, contributing significantly to a price growth of an estimated 7% to 10% in 2024. Projections for 2025 exceed the long-term average of 500 tons due to ongoing purchases, which are likely to further support gold prices. Nevertheless, a notable decline in purchases could exert pressure on the price level. Ross Beaty, chairman of Equinox Gold, confirmed the current and future potentials of the gold market in a CNBC interview on December 3. Beaty emphasized the continuing positive factors such as the strong dollar, the inflation outlook, and a favorable gold supply, which contributed to the described successes in 2024, and looks optimistically to another glowing year in 2025 for the precious metal.