World Gold Council forecasts strong 2025 as precious metals gain momentum
The World Gold Council (WGC) is forecasting that gold exchange-traded funds (ETFs) and over-the-counter (OTC) investment will benefit from macroeconomic forces in 2025.
On the back of record-breaking demand for the precious metal in 2024, the WGC’s latest report said it expected tailwinds stemming from generally lower interest rates, richly valued equities, a softer US dollar and geopolitical risk, mostly expressed through trade and economic uncertainty.
The WGC’s Gold Demand Trends – Q4 and Full Year 2024 report said uncertainty related to the Trump administration’s all-out pro-growth agenda is likely to be another positive for gold.
US dollar weakness
The WGC also forecast that gold may benefit from potential US dollar weakness stemming from a combination of ‘extreme’ overvaluation and a push for both lower rates and a more competitive dollar by the administration.
It suggested the dollar may also be impacted by a likely narrowing in German Bund-US Treasury spreads as German elections push local growth policies to the fore.
Regionally, the WGC believes that gold ETF investment in the US has the potential to bring in substantial flows overall, even if there are transient periods of outflows.
Record 2024 demand
The WGC reported that total gold demand rose 1% year on year in Q4 2024 to reach a new quarterly high and contribute to a record annual total of 4,974 tonnes.
It noted that central banks continued to purchase gold at a staggering pace, with buying exceeding 1,000t for the third year in a row, accelerating sharply in Q4 to 333t.
Annual investment increased 25% to a four-year high of 1,180t.
Gold ETF impact
Gold ETFs in particular provided a sizable impact, with 2024 being the first year since 2020 in which holdings were essentially unchanged.
This is in contrast to the heavy outflows of the prior three years.
Full-year bar and coin demand was in line with 2023 at 1,186t, with the former growing and the latter shrinking.
Annual Australian bar and coin investment slowed again in 2024, although the year ended with a flourish as Q4 demand picked up sharply with investors seeing the price dip as a buying opportunity.
Technology use surging
The use of gold in technology jumped by 7% to 21t, largely driven by continued growth in AI adoption.
On the negative side, the increase in gold prices saw an 11% decline in annual gold jewellery consumption to 1,877t.
While consumers could only afford to buy in lower quantities, spending on gold jewellery jumped 9%.
Total gold supply in 2024 increased 1% year on year as mine supply and recycling both posted growth.
Initial estimates suggest that mine production reached 4,974 tonnes, the highest in the WGC’s 30-year data series, driven by higher mine production and recycling supply.