Gold is closing out the year with one of its strongest performances in decades, posting a 27% surge largely driven by U.S. monetary easing, persistent geopolitical tensions, and significant purchases by central banks.
Despite the bullion slightly declining following Donald Trump’s major victory in the November U.S. presidential election, its gains for 2024 continue to surpass those of most other commodities. Base metals have experienced a varied performance, with iron ore experiencing a significant drop and lithium facing increasing challenges.
The disparity in commodity performances throughout 2024 underscores the lack of a uniform driver for the sector’s outcomes, while directing attention to the potential trajectories of both base and precious metals in 2025. Investors are concentrating on uncertainties surrounding U.S. monetary policy, potential tensions under Trump’s presidency, and China’s growth stimulation efforts.
Gold’s robust rally in 2024, which saw the metal achieve a series of record highs, suggests a potential shift in market dynamics. Remarkably, this has occurred despite a stronger U.S. dollar and higher real Treasury yields.
David Scutt, an analyst at StoneX Group Inc., noted that the precious metal has shown remarkable and relentless performance, which he considers the most surprising market event of 2024. He observed that the dynamics of gold appear to have shifted significantly.
Conversely, other metals have faced significant challenges, mainly due to China’s protracted economic slowdown.
The LMEX Index, tracking six metals on the London Metal Exchange, is projected to achieve a modest annual gain, with diminished Chinese demand somewhat balanced by sporadic supply pressures, particularly affecting copper and zinc, which may persist into the coming year.
Iron ore has seen a downturn, with China’s construction downturn putting the world’s largest steel industry into crisis. Singapore futures have plunged about 28% this year.
Moreover, lithium, a crucial material for battery production, is poised for a second consecutive annual drop, exacerbated by a global oversupply and volatility in the electric vehicle sector.
