(Kitco News) - It was not just a fluke that gold was able to withstand higher bond yields and a stronger U.S. dollar through 2024, as the precious metal continues to establish itself as an important global financial asset, according to one U.K.-based bullion dealer.
In his 2025 outlook, Paul Williams, Managing Director of Solomon Global, said that the conditions that drove gold to 39 record highs last year are still in place and should keep the precious metal well-supported in the new year.
“2024 underscored gold’s timeless role as a safe-haven asset. In a world grappling with geopolitical conflicts and economic uncertainty, gold has provided stability and security for investors,” said Williams in the report. “The record highs achieved [in 2024] reflect not just market conditions but also a broader sentiment of caution and hedging against risk. This context looks set to continue in 2025.”
One of the biggest factors that drove gold prices to record highs was geopolitical instability, as the world faced two major conflicts: Russia’s ongoing invasion of Ukraine, followed by a new war between Israel and Hamas. Chaos in the Middle East has only increased after a Syrian rebel army drove the nation’s leader, former President Bashar al-Assad, into exile in Russia.
Williams said there seems to be little hope of a diplomatic solution to the intensifying conflict in Ukraine or the Middle East.
Geopolitical uncertainty has also picked up in recent days after President-elect Donald Trump continued to issue threats to implement major tariffs to support his America-First policies.
“Trump’s tariffs, far from being detrimental, could support gold. The costs of tariffs, essentially taxes on imported goods, are often passed down to consumers as higher prices. For gold investors, such policies present unique opportunities, primarily because tariffs often create economic uncertainty and inflationary pressures — two conditions under which gold historically thrives,” said Williams.
A growing number of political pundits have warned that the geopolitical uncertainty will add to the ongoing deglobalization trend, creating a multipolar world and making gold an attractive neutral financial asset.
In this environment, Williams said that he expects central banks to continue diversifying away from the U.S. dollar and buying gold throughout the year.
“Nations like China, Russia, and Turkey ramped up their gold reserves, seeking to reduce dependence on the U.S. dollar amid an increased move to de-dollarization. This trend looks set to continue, or even increase, as more banks diversify from U.S. treasuries, and could provide further upward momentum for gold,” he said. “Additionally, rising wealth in emerging markets continues to drive demand, especially during economic or political uncertainty. This strategic move by central banks underscores a broader shift in the global financial system.”
The last catalyst Williams sees driving gold prices higher this year is growing economic weakness. Although the U.S. economy has remained fairly resilient, economists note that there are growing risks as the labor market slows down.
“If economic conditions worsen in 2025, leading to a global slowdown or recession, investors will likely continue flocking to gold. Weak economic data or slowing growth could support higher prices. The potential for a return of rising inflation will continue to influence gold's price,” said Williams.
