Gold has risen 23% since the beginning of 2024 and its price remains at an all-time high of around 2,260 euros. Geopolitical tensions, central bank purchases and a weak dollar reaffirm gold as the safe-haven asset par excellence in times of economic uncertainty.

Gold prices experienced a notable rally on Tuesday on optimism that the Federal Reserve will cut interest rates this month and remain around 2,260 euros per ounce, as investors’ attention now turns to the US payrolls report due on Friday.

Also, the persistent demand for gold by central banks – they purchased more than 1,000 tonnes of gold last year alone, setting a new record – the weak dollar and global geopolitical tensions are the main factors that have kept the value of the precious metal at record highs.

This has been reflected in the significant price increase of 23% since the beginning of the year, outperforming stock market indices such as the S&P 500, which has risen by around 17%, and doubled its value in the last five years.

Outlook for the coming months

The financial market narrative remains unchanged, with optimism all around despite the occasional fluctuations in gold prices. The weak dollar, possible rate cuts and low US Treasury yields – 10-year bond yields have fallen 25 basis points in the last month – create a favourable environment for continued demand for gold.

Goldman Sachs said in its latest report on Tuesday that gold has the greatest upside potential in the near term, given its role as a favoured hedge against risk. Conversely, weak demand from China has led to a ‘more selective and less optimistic’ outlook on other commodities.

‘The Fed’s impending rate cuts are poised to drive Western capital back into the gold market, a component largely absent from the strong gold rally seen over the past two years,’ the Wall Street bank stated in its “Go for Gold” note. That said, it adjusted its gold price forecast to $2,700 (€2,444) in early 2025 from the previous forecast of late 2024, citing a price-sensitive Chinese market.

On the other hand, sustained demand from central banks around the world that bought a record 483 tonnes of gold in the first half of 2024, pushing the asset to an all-time high, suggests that the precious metal will maintain its safe-haven appeal in the months ahead.

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