Gold ends 2024 with 26% returns. What’s ahead for yellow metal in 2025?

Gold delivered one of its best performances in a decade in 2024 recording an annual growth of 26%, fuelled by central bank purchases, geopolitical tensions, and expectations of accommodative monetary policies by global central banks, including the Reserve Bank of India (RBI).

The yellow metal breached the Rs 80,000 per 10 gm mark this year, witnessing a strong rally before hitting a Fed wall. The last reported price was Rs 76,469 on Tuesday around 2 pm, nearly 5% lower from its lifetime peak of Rs 80,282 on the MCX.

“The performance of gold and silver in 2024 has underscored their importance as strategic assets in a well-balanced investment portfolio. With expectations of moderating inflation, geopolitical risks, and shifts in monetary policy, both metals are poised to remain resilient in 2025. Investors should view gold and silver not merely as short-term speculative assets but as long-term wealth preservation tools and strategic hedges against uncertainty,” said Narinder Wadhwa, Managing Director & CEO at SKI Capital.

Wadhwa underscored silver’s 2024 performance to be even better than its shinier peer with prices witnessing a substantial rise of nearly 42%. “Starting the year at approximately Rs 70,000 per kilogram, silver crossed the psychological barrier of Rs 1 lakh per kilogram, driven by robust industrial demand, especially in solar energy and electric vehicle (EV) technologies, along with its historical appeal as a store of value,” he said.

The buoyancy in bullion markets was further supported by heavy retail demand during India’s festive and wedding seasons, as well as increasing geopolitical instability, which pushed investors towards precious metals as a safe-haven hedge.

In contrast, equities had a roller coaster year with headline indices Nifty and Sensex managing returns to the tune of 9% and 8%, respectively.

Gold’s 10-year performance

Gold has consistently delivered average annual returns of approximately 8%, with standout years during periods of global financial uncertainty and rising inflationary pressures. In 2023, gold delivered an annual return of 13.1%.

Gold Outlook in 2025

Gold will be up against three major events in the first two months of 2025 and experts point out the likelihood of volatility. First will be Donald Trump taking charge as the US President and we have seen how DXY and bond yields have moved. The other two factors are domestic — one is the Union Budget 2025 and the other is the Reserve Bank of India (RBI) MPC under a new Governor.

In the last three months, the DXY has appreciated nearly 7%, much to the disadvantage of the yellow metal and if the greenback strengthens further, the prices could fall in the near term.

While Trump’s presence will add to global uncertainties aiding gold, a stronger dollar could take away some sheen, said Anuj Gupta, Head Commodity & Currency at HDFC Securities. This analyst estimates gold to hit a target of Rs 82,000 in 2025 with strong resistance at Rs 84,500.

Jateen Trivedi, Vice President and Commodity & Currency Research Analyst at LKP Securities, sees gold trading in the range of Rs 82,000-85,000. He expects silver to outperform this year too with a base case target of Rs 1.1 lakh while a bull case target of Rs 1.25 lakh.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)