Gold achieved its most significant price surge in 14 years, boasting a 27% increase throughout 2024. This remarkable performance was primarily driven by factors such as US monetary easing policies, persistent geopolitical uncertainties, and a notable wave of gold acquisitions by central banks around the globe.
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Despite a slight dip following Donald Trump’s decisive victory in the November US presidential election, gold’s overall gains for 2024 significantly outperformed most other commodities. Base metals experienced a mixed year, while iron ore faced a substantial decline, and lithium’s challenges intensified.
Divergent Paths: Analyzing 2024’s Commodity Performance
The contrasting performances across the commodity sector in 2024 underscore the absence of a single dominant factor influencing market trends. This divergence highlights the importance of understanding the individual dynamics affecting each metal, both base and precious, as we look ahead to 2025. Investors are currently focused on uncertainties surrounding US monetary policy, potential challenges arising from Trump’s presidency, and China’s ongoing endeavors to stimulate economic growth.
Gold’s Resilience: Defying Traditional Headwinds
Gold’s impressive gains in 2024, marked by a series of record highs, suggest a potential shift in market dynamics. Notably, this surge occurred despite a stronger US dollar and rising real Treasury yields, factors typically considered unfavorable for gold prices.
This unusual resilience has caught the attention of market analysts. David Scutt, an analyst at StoneX Group Inc., described gold’s performance as “as remarkable as it’s been relentless,” calling it his “biggest market surprise of 2024.” He further suggests that “the gold game looks to have changed.”
China’s Impact: Weighing on Other Metals
In contrast to gold’s success, other metals faced difficulties largely attributed to China’s extended economic slowdown.
- LMEX Index: The London Metal Exchange Index of six base metals registered a modest annual gain. Softer Chinese demand was offset by occasional supply disruptions, particularly for copper and zinc. These supply issues may persist into 2025.
- Iron Ore: Iron ore prices plummeted due to weak construction activity in China, pushing the nation’s steel industry into a crisis with limited prospects for immediate recovery. Futures in Singapore experienced a significant drop of approximately 28% this year, marking the largest annual decline since 2015.
- Lithium: The battery metal lithium is poised for its second consecutive year of sharp decline. A persistent global supply glut, coupled with turbulence in the electric vehicle industry, has exacerbated the challenges facing this market.
Current Market Snapshot: Gold, Iron Ore, and Copper
As of Tuesday’s trading, spot gold saw a 0.7% increase to $2,625.95 an ounce, down from its October peak above $2,790. Iron ore futures settled 0.4% higher at $100.97 a ton. Meanwhile, LME copper experienced a 1.6% decline, closing at $8,768 a ton in London. This varied performance underscores the complex and dynamic nature of the metals market heading into 2025.
