In a year marked by significant global economic shifts and geopolitical uncertainties, gold has emerged as the standout investment of 2024. Gold outperformed stocks, bonds, and other commodities.
After starting the year at $2,050, the precious metal delivered a remarkable 33% return that surpassed both the S&P 500 and traditional fixed-income investments.
*As of 30 November 2024. Indices used Bloomberg Barclays Global Treasury ex US, Bloomberg Barclays US Bond Aggregate, ICE BofA US 3-Month Treasury Bills, New Frontier Global Institutional Portfolio Index, MSCI World ex US Total Return Index, Bloomberg Commodity Total Return Index, MSCI EM Total Return Index, LBMA Gold Price PM (USD/oz), MSCI US Total Return Index.
Gold Performance
Despite a challenging start that saw prices dip to $1,985.10 in mid-February, gold demonstrated remarkable resilience.
The precious metal not only recovered but surged to reach a historic high of $2,800 in October, before settling around $2,700 in December.
Three key factors have driven gold’s exceptional performance in 2024. First, persistent inflation concerns, particularly in emerging markets, have reinforced gold’s role as a hedge against currency devaluation.
Second, central banks have emerged as powerful buyers, with record purchases reflecting a broader shift away from the US dollar.
Finally, the Federal Reserve’s pivot toward rate cuts has made non-yielding assets like gold more attractive compared to fixed-income investments.
Silver: Outshining Expectations
Beginning the year at $23.82, silver saw a remarkable ascent, climbing as high as $35 per ounce at one point.
As of mid-December, silver’s year-to-date gains are approximately 37.5%, even higher than gold’s returns.
While silver is traditionally viewed as a safe-haven asset like gold, it also boasts a wide array of growing industrial applications like solar panels, electronics, and medical equipment.
As industries pivot toward sustainable practices, silver’s importance in technologies like solar panels and hydrogen fuel cells is becoming increasingly recognized.
Supply constraints in the physical market have further supported prices, as production struggles to keep pace with rising demand.
Platinum
Platinum is a rare and valuable metal that’s used in all sorts of applications like catalytic converters, pacemakers, and cancer treatment drugs, as well as fertilizers and electronics.
In 2024, platinum’s performance has been mixed. The metal opened the year at $994.25 per ounce but closed at $944.36 per ounce, resulting in a year-to-date return of approximately -5.02%.
The World Platinum Investment Council (WPIC) predicts a substantial market deficit of over one million ounces for 2024 due to strong demand outpacing supply. This trend is expected to continue into 2025 as demand grows across various sectors.
There has been a notable increase in investment interest in platinum, particularly through exchange-traded funds (ETFs). In Q2 2024 alone, ETF inflows reached their highest level since Q3 2020.
As economies recover and industrial activities ramp up post-pandemic, the demand for platinum in various applications—especially automotive and electronics—is expected to increase significantly.
Palladium
Palladium is a precious metal primarily utilized in the automotive industry for its critical role in catalytic converters, electronics, dentistry, and hydrogen storage technologies.
Palladium opened at $1,096 per ounce, and has experienced considerable volatility throughout the year. By the end of the year, it closed at approximately $939 per ounce, resulting in a year-to-date return of about -14.69%.
Analysts predict that palladium will experience a supply deficit in 2024 due to constrained secondary supply from recycling and stable primary supply levels. This deficit could support price recovery as demand outpaces available supply.
While short-term dynamics may be challenging, long-term projections suggest that as global automotive production stabilizes and new emission standards are implemented, demand for palladium could rebound.
Looking Forward to 2025
With a 33% gain in 2024, gold has delivered its strongest performance since the 1970s, reinforcing its status as a premier safe-haven asset during periods of uncertainty.
Looking ahead to 2025, major financial institutions including Goldman Sachs, Bank of America, and Citigroup share a bullish outlook, with all three forecasting gold prices could reach $3,000 per ounce. While such projections are never guaranteed, gold’s performance in 2024 has demonstrated this is entirely possible.
For perspective, if gold were to match 2024’s performance in 2025, prices could potentially reach $3,620 – well beyond even these ambitious forecasts. While past performance doesn’t guarantee future results, gold’s remarkable 2024 rally suggests the metal’s bull run may have room to continue.
Implications for Investors
Gold and silver have emerged as standout performers in 2024, while platinum and palladium have faced more challenging conditions despite strong fundamental support. For investors, these trends remind us of several key lessons:
- First, the traditional role of precious metals as portfolio diversifiers has been strongly validated. Gold’s exceptional 33% return amid various global uncertainties demonstrates its continued effectiveness as a hedge against both geopolitical and economic risks.
- Second, the gap in performance between different precious metals highlights the importance of understanding each metal’s unique drivers. While gold and silver benefited from monetary policy shifts and safe-haven demand, platinum and palladium’s performance were more closely tied to industrial factors and automotive sector dynamics.
- Third, the supply-demand fundamentals across the precious metals complex suggest potential opportunities. The projected deficits in platinum and palladium markets, combined with growing industrial applications for silver, could create price support even if investment demand moderates.
For portfolio allocation, these insights suggest that while gold remains a cornerstone defensive asset, investors might benefit from selective exposure across the precious metals spectrum. The strong fundamental case for platinum, despite its underperformance in 2024, may present an attractive entry point for long-term investors.
As we move into 2025, maintaining a diversified approach to precious metals investing – whether through physical holdings, ETFs, or mining stocks – could help investors capture opportunities while managing sector-specific risks. The key will be remaining responsive to shifting macroeconomic conditions while maintaining focus on the long-term strategic role of precious metals in portfolio construction.
