Florian Grummes analyzes: Will gold hit USD 3,000 in 2025?

The precious metal markets made history in 2024. Gold hit new record highs, silver shone with double-digit gains, and an impending trend reversal could lay the foundation for a spectacular 2025. Florian Grummes, precious metals and crypto expert, analyzes the impressive development of precious metals, their drivers and gives an exciting outlook as to why USD 3,000 for gold and USD 50 for silver could soon become a reality.

Review of gold and silver 2024

The year 2024 was a banner year for precious metals such as gold and silver, characterized by exceptional price developments and high returns. Florian Grummes, precious metals and crypto expert, highlights that gold prices reached a new all-time high of $2,790 on October 31st. This represents an impressive 27% increase year-to-date. Silver followed with a 12-year high of $34.89, up 24.3% year-on-year.

Developments in the Eurowar were also remarkable. Gold gained around 35% while silver gained around 31.7%. These increases clearly show how well precious metals have proven their role as a safe haven in a market environment characterized by uncertainty. Not only do they serve as a hedge against geopolitical and economic risks, but they have also established themselves as a stable anchor for investors seeking long-term value preservation. The rally began back in October 2023, triggered by a combination of geopolitical tensions and growing demand. The Ukraine conflict and the escalation of conflicts in the Middle East created an environment of global uncertainty that increased the attractiveness of gold and silver as protection mechanisms against crises. In addition, rising inflation rates and monetary policy adjustments are providing further demand stimulus.

Despite temporary setbacks, the upward trend remained robust in 2024. Price developments accelerated, particularly from the middle of the year onwards, which was due to increased demand and limited supply. Even the correction phase and consolidation that began at the end of October could not reduce the positive annual performance.

Key forces behind the precious metals rally

Grummes names several factors that have significantly influenced the price dynamics of gold and silver in 2024:

Geopolitical tensions: Events such as the ongoing conflicts in Ukraine and increasing tensions in the Middle East are driving investors to favor safe-haven assets such as gold.

Increasing demand from emerging markets: Countries like China and India increased their demand for gold and silver, which further increased prices. Particularly silver of its importance in key technologies such as solar panels and electric vehicles.

Production bottlenecks: The limited availability of silver due to production problems is increasing the shortage and driving prices higher.

Central banks as buyers: Central banks, including the People’s Bank of China, massively increased their gold reserves. This underpins the strategic role of precious metals as a reserve currency and hedge against economic uncertainties.

Macroeconomic factors: inflation and interest rates

Global monetary policy played a central role in the development of precious metals markets in 2024. The interest rate turnaround in the US significantly reduced the opportunity cost of holding gold and silver. At the same time, the prospect of further interest rate cuts made precious metals even more attractive for investors. Inflation was one of the dominant themes of the year. High inflation rates put many investors under pressure to protect their portfolios against loss of purchasing power. This led to increased demand for gold and silver, which act as a classic hedge against inflation.

Futures Market and Sentiment: A Double-Edged Sword

The Commitments of Traders (CoT) report for the gold market shows that commercial traders continue to hold significant short positions. This high level of protection against falling prices suggests that the futures market is not yet completely bullish.

Florian Grummes explains that an easing in this area could potentially unleash a wave of additional purchasing power that would drive the price of gold further up. The current market sentiment, measured with a value of 70 out of 100 points, shows an optimistic attitude among investors. However, this optimistic sentiment is approaching euphoria territory, indicating growing vulnerability to risk. Grummes warns that excessive optimism can often lead to sharp, short-term corrections when investors suddenly take profits or negative news weighs on markets.

In the long term, however, the fundamental bullish attitude remains intact. According to Grummes, corrections during euphoric phases can help build excessive optimism and create a healthy basis for the continuation of the upward trend. This is also reflected in the historical dynamics of the gold market, where sharp pullbacks have often been used as an opportunity for additional purchases.

Seasonality: Tailwind for 2025

According to Grummes, the historical seasonality for gold suggests that the price could continue to rise in the next few months. Typically, precious metals begin an upward move after the last Fed interest rate decision of the year that lasts into the spring. This seasonal strength, coupled with robust demand, could push gold prices towards the $3,000 level.

Silver with even greater potential

Grummes paints an even more positive picture for silver. The price could finally leave the trading range below USD 30 that has existed for years. A break above the year-to-date highs could trigger a dynamic rally and push the price towards the all-time high of $50. Silver would particularly benefit from increasing demand in key technologies, while the shortage in supply would provide strong support.

Macroeconomic environment

According to Florian Grummes, 2024 was marked by a clear divergence in the economic development of different regions. While some markets such as the Asia-Pacific region and the US are showing growth and stability, others have suffered from uncertainty and structural weaknesses. The Asia-Pacific region, led by China and India, began as a growth engine. China relied on robust consumer spending and a strong industrial base, while India stood out for its technological advances and economic diversification. Both countries also increased their demand for precious metals, thereby strengthening their strategic importance. The US is showing solid performance despite geopolitical tensions, supported by robust consumer demand and the dominant technology sector, led by the “Magnificent Five” – Apple, Microsoft, Alphabet, Amazon and Nvidia. Bullish investor sentiment and capital inflows into US equities contributed to an all-time high in the market’s allocation, although inflation risks remain. However, Europe remained marked by structural challenges, highlighting the need for long-term reforms.

At the same time, de-dollarization trends gained importance as emerging economies diversified their foreign reserves. Worldwide, particularly in emerging markets, continued to expand their gold reserves, underscoring the strategic importance of precious metals as a central bank safe reserve.

Conclusion: Precious metals ready for new highs

Gold prices are closing out an exceptional 2024. At the beginning of the year, the price for a troy ounce of gold was USD 2.062; it is currently trading at USD 2.621 – an increase of around 27%. After a strong upward move, gold reached a new all-time high of $2,790 at the end of October, followed by a correction phase. The first sell-off low was reached in mid-November at $2,535, which was followed by several weeks of consolidation at high levels. With another low at $2,583 and a subsequent recovery, the correction phase appears to be over. The interrupted upward movement could soon resume. Supported by positive seasonality, gold prices could target $3,000 in the first half of 2025. According to Grummes, the picture for silver is even better. The sub-$30 trading range could be overcome in the next few months. A break above the yearly highs of $32.50 and $34.86 could trigger a euphoric rally that could push silver prices to the all-time high of $50.

Florian Grummes
Precious metals and crypto expert
www.midastouch-consulting.com
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Source: www.celticgold.eu

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