In 2024, gold has distinguished itself as one of the most remarkable performers in the investment landscape. Futures contracts for gold exchanged in New York climbed approximately 71% this year, propelling the metal toward its best annual gains in nearly half a century. The last comparable surge occurred in 1979, a period marked by President Jimmy Carter's administration, a Middle Eastern crisis, soaring inflation, and an acute energy crunch within the United States.
Today’s backdrop shares some of those unsettling features. Tariffs are causing disruptions in international trading patterns, and armed conflicts persist, including Russia's ongoing war in Ukraine and intermittent hostilities between Israel and Iran. Additionally, the U.S. has taken assertive actions like seizing oil tankers near Venezuelan waters. Such geopolitical frictions fuel investor demand for traditionally resilient assets like gold, which is prized for retaining value amid crises, inflationary pressures, or when currency values diminish.
Joe Cavatoni, senior market strategist at the World Gold Council, emphasizes that "uncertainty remains a defining feature of the global economy," a condition that enhances gold's attractiveness as both a strategic diversification vehicle and a source of financial stability.
At the outset of 2024, gold futures traded around $2,640 per troy ounce. This year, the metal ascended past historic thresholds, reaching a record peak exceeding $4,500 per troy ounce by early July. Analysts from JPMorgan Chase forecast further gains, projecting prices to surpass $5,000 an ounce by 2026.
This robust performance has significantly outpaced the broader stock market; the S&P 500, a benchmark for U.S. equities, has risen by approximately 18% this year, while gold futures appreciated by 71%. In 2024, gold futures climbed 27%, compared to a 24% increase in the S&P 500, underscoring gold’s competitive edge amid evolving economic conditions.
One factor influencing gold’s appeal is the Federal Reserve’s recent monetary policy adjustments. While gold does not generate income like bonds, the Fed's rate-cutting trend in recent months has contributed to declining bond yields. Lower bond returns can make gold a more enticing investment relative to fixed income securities.
Another contributing factor is a weakening U.S. dollar. A depreciated dollar reduces the relative cost of gold for buyers using other currencies, enhancing international demand.
Beyond investor purchases, demand for gold is evident from heavier acquisitions by central banks worldwide. China, notably, is expanding its gold reserves at a marked pace—a strategy interpreted by Ulf Lindahl, CEO of Currency Research Associates, as an effort to reduce reliance on U.S. financial assets like Treasury securities and the dollar itself. This strategic shift accelerated following Russia's 2022 invasion of Ukraine, which triggered Western governments to freeze Russia’s U.S. dollar-denominated assets. In response, both Russia and China increased gold accumulation to mitigate exposure to American policy and sanctions.
Ole Hansen, head of commodity strategy at Saxo Bank, identifies the current phase of central bank buying as geopolitically driven, distinguishing it from previous periods of gold demand. He notes that the freezing of sovereign reserves and a growing fragmentation of the global financial system are instigating a structural increase in gold demand expected to persist long-term.
Data from the World Gold Council confirms this trend: over the past three years, global central banks have collectively purchased more than 1,000 metric tons of gold annually, a substantial increase from the 400 to 500 tons average per year seen in the preceding decade.
The remarkable price rallies extend beyond gold to other precious metals as well. Silver futures have surged approximately 146% in 2024, platinum futures nearly 150%, and palladium about 100%, reflecting investor appetite for commodities deemed protective against uncertainty.
Hakan Kaya, portfolio manager at Neuberger Berman, describes precious metals broadly as “a hedge against an increasingly uncertain world,” signaling a wider market recognition of metals as shelter assets.
Looking ahead, experts remain optimistic about gold's price trajectory. Lindahl anticipates sustained gains into 2026, supported by ongoing central bank acquisitions which hoard bullion and reduce market availability. Simultaneously, mounting concerns regarding significant government deficits and high debts add to the appeal of gold as a safeguard, according to Matt Maley, chief market strategist at Miller Tabak + Co.
Maley notes, “As investors have become more cognizant of these issues, they have been looking toward gold as a safe haven,” reinforcing the metal’s enduring role amid complex fiscal and geopolitical conditions.