Marcus Garvey

The most striking feature of gold’s price performance, especially in real terms, is that it has occurred without declining real interest rates. We primarily attribute this to developed markets’ fiscal outlooks increasing the attraction of gold’s lack of credit and counterparty risk, a feature which should support private sector financial flows again in 2025. Three key drivers for gold: 1. Trump administration policy impact on the projected US fiscal deficit and inflation, alongside the FOMC response to this. 2. Chinese government stimulus and the extent to which it impacts onshore investors’ demand for gold. 3. The pace of ongoing central bank gold buying.

Holding onto gold’s coattails and rallying on its precious metal characteristics. Underlying support also comes from its tight physical balance sheet but, against the backdrop of a potential trade war, a reacceleration in global manufacturing activity – that would further cyclically boost silver on its industrial metal characteristics – seems unlikely to come within 2025.

A structurally challenged supply backdrop has enabled the market to move into persistent forecast deficits, even without strong demand growth. Firmer price performance would likely require further producer discipline, however, especially in the face of a strong US dollar.

The performance of catalyst bearing hybrid vehicle sales is slowing the pace of demand destruction but, given the implications of still-rising battery electric vehicle sales, producer discipline remains insufficient to remove forward surplus projections.