Will gold, which outperformed India’s heartbeat indexes Sensex and Nifty in 2024, continue its momentum in 2025? And what are Yellow Metal’s goals?
Gold has witnessed an impressive rally in 2024, rising more than 20% on the COMEX through September. The surge follows a period of economic uncertainty caused by the pandemic and is driven by a number of key factors, primarily central bank policies and geopolitical tensions. Additionally, various dynamics such as supply-demand imbalance and domestic market conditions have influenced the price fluctuations of these metals. In 2024, safe and risky assets sometimes moved simultaneously. However, despite the sharp volatility, the former performed better. Gold and silver prices rose significantly through October 2024, driven by the escalation of the war, high expectations of interest rate cuts, and overall demand.
However, the upward trend from the high point eased as the volatility of the dollar index, the possibility of easing tensions in the Middle East, and the election of US President-elect Trump put pressure on prices. Historically, safe-haven assets have taken a hit during at least the first few months after a Republican leader takes office as President of the United States. This tug-of-war and volatility for both risky and safe assets could continue into 2025.
Donald Trump is set to become President of the United States, but given his protectionist tendencies, what does this mean for commodity markets?
President-elect Donald Trump has made several promises that could increase market volatility. He proposed extending tax cuts and imposing tariffs on China and other countries with the goal of “making America great again.” Such a move could support the dollar at lower levels. But despite having a majority in the Senate, it will be important to see how President-elect Trump addresses key economic challenges such as rising debt, monetary and fiscal policy, Middle East tensions and other issues as he implements his agenda.
Although key commodity prices may be slightly soft in the first quarter of 2025, the second half of the year could bring positive momentum to fuel this recovery.
China will remain an important factor in how the world consumes raw materials. Where will the impact be greatest: oil, base metals, or bullion?
Although China has disappointed market expectations in 2024, it is noteworthy that officials from the People’s Bank of China (PBoC) frequently appear to announce economic support measures. These measures include several stimulus plans, rate cuts and other measures aimed at boosting the economy and supporting affected sectors. These measures have not yet been reflected in economic data, but a significant recovery could lead to a sharp rebound in industrial metals, including silver. This in turn may increase demand for crude oil, supporting prices. With almost a month left until the budget, what are the government’s expectations for the sector?
In the last budget, customs duties on both gold and silver were reduced from 9% to 6% (including 1% AID tax). There are no major expectations in this budget that could impact the raw materials sector. With so many regulatory actions taking place in the stock market, what are your expectations from Sebi in the new year?
In a recent announcement, the Securities and Exchange Board of India (SEBI) mandated that only one weekly options contract be accepted per exchange from November 20, 2024, hence the expectation that domestic commodity exchanges may also start expiring weekly options.
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