At the outset of the year, gold prices commenced their journey at a remarkable peak of $2072.7 per ounceHowever, on February 14, they briefly dipped to $1996.4 per ounce before embarking on a soaring trajectory, which would see them shatter history with an extraordinary 40 breakthroughs in the course of the yearBy October 30, gold reached an impressive annual peak of $2801.8 per ounce, leaving experts and investors alike in a state of awe.
Behind this remarkable surge lies the intricate interplay of macroeconomic trends, fundamental factors, and technical analysesOn the macroeconomic front, a resurging trend of gold re-monetization captivated central banks worldwide during the first half of the year, creating a solid foundation for gold prices to thriveAs the year progressed, concerns of an impending economic recession loomed large, intensifying market calls for easing monetary policiesAdditionally, the escalating geopolitical tensions transformed gold into a safe haven for investors, further driving the price upwards due to a consistent demand for risk aversionFundamentally, global enthusiasm among central banks for gold remains robust, with a staggering 694 tons of gold purchased by the end of the third quarter of 2024, reflecting a growing acknowledgment of gold's value amidst economic uncertaintyThe rise of gold exchange-traded funds (ETFs) has also showcased a steady increase, evident in the statistics of the largest US gold ETF, the SPDR Gold TrustIts holdings soared from 815.13 tons on March 8 to 872.52 tons by December 27, an impressive accumulation of 57.39 tons, signaling strong demand for gold in the market.
In this financial whirlwind, financial institutions have played a vital roleBanks and non-bank financial institutions like Dongrong closely monitor gold price movements, offering a plethora of gold-related investment products and servicesThese derivatives, such as gold futures and options, cater to investors with varying levels of risk tolerance
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Furthermore, traditional banking institutions have a unique perspective on the gold loan businessFor example, gold mining enterprises can utilize their gold reserves as collateral, obtaining loans from banks to fund mining operations and equipment upgradesThis dynamic not only boosts their production capacity but also enhances their asset values when gold prices rise, ultimately reinforcing the credit activities of financial institutions.
Looking towards 2025, the gold market remains shrouded in uncertaintyAnalysts like Liu Siyuan from Leading Finance emphasize that the trajectory of gold prices will hinge on the Federal Reserve's interest rate policies, geopolitical conflicts, and the effects of the new U.S. government’s policiesThe resilience of the U.S. economy may compel the Federal Reserve to maintain the status quo in its interest rate decisions, creating a hazy direction for monetary policy that could result in significant price fluctuations in goldExperts predict that early 2025 will likely see a rise in gold prices, propelled by easing geopolitical tensions and expectations for the 2.0 policy, as well as favorable trends in the U.S. economyHowever, as the economy stabilizes and policy direction becomes clearer later in the year, downward pressures on gold prices may emergeNonetheless, the continuing trend of gold re-monetization and central bank purchases, combined with the ongoing expansion of U.S. debt impacting the credibility of the dollar, is expected to provide a certain level of support for gold prices.
The trajectory of the gold market in 2025 has become an area of keen interest for global investors, prompting many investment institutions to share their analysesNotably, Goldman Sachs, after thorough research, has published an optimistic report projecting a solid foundation for gold prices, attributing this to ongoing central bank purchases driven by strategies around diversifying assets and ensuring reserve security
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