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LBMA Precious Metals Market Report: Q4 2024
Wed Jan 15 2025
By any definition, 2024 was a turbulent year.
In terms of economics, there was, at least until midsummer, the ongoing threat of global inflation and potential recession, concerns that ameliorated as the US Federal Reserve, in tandem with almost all developed world central banks (excepting the Bank of Japan), cut rates for the first time since March 2020 in September (50bps) and followed this unexpectedly large move with 25 bps cuts in November and again in December.
Whereas inflation and possible recession are often regarded as having a negative impact on the gold price as high interest rates may shift investor interest to fixed income securities, this proved not to be the case in 2024. In the first eight months of the year, gold gained over 21% (from $2,074.90 – 2 Jan a.m. to $2,513.35 – 30 Aug p.m.). This upward momentum continued as global interest rates began to fall in the last third of the year, but at a slower pace. Nonetheless, in the final third of the year, the LBMA London gold price gained nearly $110 or 4.36% from the beginning of September to close 2024 at $2,610.85, up over 25% - an impressive, sustained performance, and the strongest for 14 years.
Clearly there were other price drivers at play during the year, which disrupted the conventional inverse relationship between the gold price and interest rates. Foremost among these for many delegates at the October LBMA/LPPM Global Precious Metals Conference in Miami, as well as for central banks and a range of institutional and retail investors, was the fact that the ongoing wars between Russia and Ukraine, and Israel and Hamas, showed no signs of conclusion. Indeed, in the case of the latter, this conflict expanded through the year to involve Lebanon, Yemen, and - perhaps most worryingly - Iran.
Further, as the year drew to a close, the collapse of the long-established, albeit brutalist, Assad regime in Syria on 8th December led the BBC’s highly regarded International Editor, Jeremy Bowen, to describe Syria as “at the centre of a geo-strategic earthquake in the Middle East.” He continued that “the region, yet again, is going to be a big global pre-occupation in the next 12 months, not just for Donald Trump when he re-enters the White House, but for all of us. History shows that trouble in the Middle East gets exported.”
It is arguable that this troublesome prospect which developed as Christmas 2024 approached was at least in part responsible for arresting the slight slide in the gold price which materialised from 6 November as the results of the US Presidential Election became apparent.
From 18 October to 6 November, as it became increasingly the (erroneous) consensus view that the election was on a knife-edge leading to fears that the results might be contested forcefully, if not violently, no gold London auction price, in either the morning or afternoon session, settled at below $2,700. In fact, the average price achieved over the 27 auctions in this time period was $2,741.63. By comparison, the average auction price for the following 27 sessions was $2,633.86 and only once did gold breach $2700 during that period whereas there were seven occasions when the price settled below $2,600.
The fact that the gold price printed, on average, some $110 below its immediate pre-election levels, should not, however, be interpreted as a judgement, one way or the other, on Donald Trump’s victory, so much as a further proof of the axiom that markets dislike uncertainty, and in gold’s case, this dislike is regularly manifested in higher prices reflecting the metal’s ongoing safe-haven status.
Reflecting both economic and geopolitical concerns, many central banks, particularly in developing economies, were active buyers of gold through the year. To end-October - the latest date for which World Gold Council figures are available - overall central bank net purchases amounted to 694 tonnes, comparable to 2022 levels. Moreover, October itself proved to be the most active month thus far with net purchases led by the central banks of Turkey, India and Poland, of 47 tonnes almost double the 12-month average.
So, in synopsis, 2024 was exceptional for gold. The fact that the price regularly traded above $2700, through the latter part of the year, is almost extraordinary when one considers the price broke the $2000 barrier for the first time ever during 2023, and the record price for that year - $2078.40 - was set as late as 28 December.
In 2024, gold set new levels. Not only did the price trade through $2100 for the first time ever, but also through $2300, $2500 and $2700, the latter being achieved on 18th October rising to a record highpoint of $2783.95 (a.m. 30 October) only four trading days ahead of the US election (as above), and moreover only $216 below $3000 - an outside bet suggested by one or two fund managers at the beginning of the year but believed by few.
Silver
One of the recurrent themes in discussions about silver at the October Global Precious Metals Conference was that there was, and is, a continuing silver production shortfall versus the demands of global industry. As early as April, the Silver Institute had pointed up supply deficits in 2021 (-81m oz), 2022 (-253m oz), and 2023 (-140m oz), and through the year, there were few signs that this imbalance was easing.
Propelled in part by the shortfall and in part by the range of political and geopolitical drivers that appeared to dominate the gold market through the year, there was considerable speculation that silver was going to be 2024’s big winner. Indeed, from the beginning of the year through to its highpoint on 23 October, the silver price gained over 44% by comparison to gold which was up a little over 34% to its respective highpoint a week later. But whereas the gold price only faded in the last two months of the year, silver fell back significantly (down 7.8% from its highpoint).
That said, the low/high trading range for each metal were exceptional, certainly by comparison to 2023. Gold’s trading range was 40.24% in 2024 (14.26% 2023); silver was 56.26% in 2024 (19.52% 2023) - underlining the strong price growth.
Vaults
Taken from January 2024 through to November, the last month for which figures are currently available, gold and silver stocks held in London vaults, increased marginally. Gold holdings rose by 0.94% to 277.611m oz; silver stocks, meanwhile, rose by 0.49% to 846.457 m oz thus recovering from a significant low of 814.203m oz in February.
Retail Irony
Through 2024, retail buying of precious metals, notably gold, made an important contribution to overall consumption although the trend was not consistent, particularly in countries like India where high prices periodically discouraged investment buying at least until it was clear that new price levels were being established.
Ironically, in the West, one of the dates most closely linked with retail purchases of gold and silver, St Valentine’s Day (14 February), proved to be the low point, in price terms, for both metals.
Source: https://www.lbma.org.uk/