Monthly Gold Market Recap: January 2025

January 2025 witnessed significant movements in the precious metals market, with gold and silver experiencing notable price actions influenced by various economic and geopolitical factors.

Gold’s Record-Breaking Surge

Gold futures reached unprecedented levels, with the most-active April contract settling at $2,845.20 per ounce, surpassing previous records. This surge was driven by heightened safe-haven demand amid geopolitical uncertainties, a weakening U.S. dollar following a disappointing GDP report, and lower U.S. Treasury yields. Analysts anticipate that policies under President Trump’s administration, such as proposed tariffs, will continue to bolster gold’s appeal as a safe-haven asset throughout 2025. 

Silver’s Parallel Rally

Silver mirrored gold’s upward trajectory, with spot prices reaching a high of $29.97 per ounce. The metal’s dual role as both an industrial component and a safe-haven asset contributed to its price appreciation. Analysts suggest that silver may continue its significant rally toward record highs due to a mix of investor and consumer interest, a weakening U.S. dollar, and declining interest rates. 

Impact of Proposed Tariffs

The announcement of tariffs by President Trump, including a 25% levy on imports from Canada and Mexico and a 10% tariff on Chinese goods, introduced volatility into the commodities market. These measures have led to concerns about global economic growth and potential retaliatory actions from affected countries. Analysts have varied perspectives on the implications:

• Goldman Sachs predicts that Canadian oil producers will bear most of the tariff burden, with a $3-$4 wider discount on Canadian crude.

• Barclays suggests costs will be shared equally among Canadian producers, U.S. refiners, and consumers, with a narrower Brent-WTI spread preferable.

• Citi anticipates tariffs will be bullish for gold, driving prices to $3,000 per ounce, while copper may drop to $8,500 per ton.

• JP Morgan is bearish on base metals, warning of potential price drops for copper and aluminium amidst economic risks.

• RBC Capital Markets believes tariffs are unlikely to lower U.S. gas prices and might drive them slightly higher, with gold becoming more expensive in the U.S.

These developments underscore the complex interplay between policy decisions and commodity markets. 

Market Outlook

Looking ahead, the precious metals market remains poised for continued volatility. Factors such as central bank policies, geopolitical tensions, and global economic indicators will play pivotal roles in shaping the trajectories of gold and silver prices. Investors are advised to stay informed and consider these dynamics when making investment decisions.

-GCN Investment Team