Gold prices continue to soar, reaching new all-time highs this week. On Tuesday, gold hit $2,830.06 per ounce and has shown sustained growth into Wednesday.
Gold demand hit a new record in 2024, with central banks and
investors driving market strength. Get the data on gold last year in
our Q4 Gold Demand Trends report, out now.— World Gold Council (@GOLDCOUNCIL) February 5, 2025
George Milling-Stanley, chief gold strategist at State Street Global Advisors, believes gold will provide a safe haven for investors beyond just an inflation hedge as market uncertainty persists and potentially worsens.
We're excited for the release of our new Gold Demand Trends report tomorrow. We review gold demand in Q4, and 2024 as a whole – what a year it was! pic.twitter.com/fntXUwXXli
— World Gold Council (@GOLDCOUNCIL) February 4, 2025
“Nothing goes up in a straight line, but we are likely to be seeing a stronger trend for gold as the year unfolds,” he said. SSGA forecasts a 20 percent probability that gold could reach $3,100 per ounce this year in their bullish price scenario. Gold has struggled to break through resistance around $2,000 an ounce for much of the last six to seven years, but surpassed that level in February last year and has maintained momentum since.
Gold price crosses Rs 85000-mark for 1st-time; what's fueling the demand?https://t.co/jarQxD8rUF
— ET NOW (@ETNOWlive) February 5, 2025
“We believe that strength could well continue, provided the uncertainties in the markets remain — macro-economic uncertainties, with inflation being sticky and potentially going higher, and also geopolitical uncertainties,” Milling-Stanley continued.
Gold’s safe haven role
He pointed to the armed conflict in Europe with nuclear risks, spreading conflict in the Middle East beyond Israel’s borders into open clashes with Iran, and low confidence in ceasefire talks as contributing to a “messy situation.”
Gold has had a strong year amid uncertainty surrounding the Federal Reserve’s interest rate position and potential impacts from President Trump’s policies, including on tariffs.
The metal is seen as a natural inflationary hedge. “In spite of all the uncertainties, things have become even more favorable for gold with the incoming administration and with all the uncertainties and the volatility that that’s bringing,” said Milling-Stanley. He added, “The incoming administration’s immigration policies are likely to put upward pressure on wages in the United States.”
These factors indicate gold is a natural hedge for diversified portfolios aiming to avoid pitfalls from volatility in debt and equity markets, according to Milling-Stanley.
“People buy gold not just because they think the price is going up but because of the protective attributes that gold offers a portfolio. It doesn’t have a strong relationship with stocks or bonds, so it’s offering a level of diversification that few other assets can manage.”
However, Milling-Stanley does not expect potential tax cut extensions for the wealthy to be inflationary, as these individuals may not necessarily spend the additional money. Tax cuts for lower-income people could drive higher prices as savings are immediately spent.