Bull run in Gold will continue in 2025 over hedge against geo-political crisis, central banks' buying: Report

New Delhi [India], December 30 (ANI): The gold market remained upbeat throughout the year 2024, accumulating handsome gains for the yellow metal investors, and it is expected that the precious metal will shine going into the New Year.
Gold logged about 27 per cent returns in 2024, publicly available data showed.
MUFG Bank, Japan's largest bank and one of the world's largest, in a report, asserted that the bull run in gold will continue through 2025. It attributed two key reasons -- hedging against geopolitical risks and central bank demand in emerging markets.
"Gold's unshakable bull market remains our most constructive conviction for the second consecutive year, reinforced by a combination of "fear" (geopolitical hedge of first resort) and "wealth" (EM central bank demand) dimensions," the MUFG Bank report titled 'Commodities 2025 outlook: Stay selective, hedge Trump-induced tail risks' read.
"Demand from financial and monetary institutions, investors and speculators on the back of US Fed cuts, US policy uncertainty and heightened geopolitical tensions offer compelling entry for our long gold call," it added.
Central banks around the world shored up their gold reserves amid uncertainties that emanated from the ongoing geopolitical uncertainties. Gold is always considered a safe investment bet.
Gold has consistently been one of the best-performing assets in recent years - barring 2021, as the yellow metal has closed in the green on the domestic front since 2016.
Coming back to the MUFG Bank report, it is neutral-to-bearish on the energy space, attributing it to possible Trump-induced tariffs and/or geopolitical uncertainties.
Oil price risks are skewed to the downside in 2025, the bank said in the report. "Not only will supply (OPEC+ and non-OPEC+) surge, that will pivot the market from a deficit to surplus, but tariffs as well as China's road fuel switching towards EVs and natural gas (LNG trucks) will hamper demand," it argued in the report.
For base metals, it is similarly neutral-to-bullish.
On agricultural commodities, US trade, foreign policy, wider geopolitical developments and uncertain La Nina are expected to amplify volatility. But it added that a low inventory base caps downside price risks.
Commodities typically act as an inflation hedge as physical assets deliver strong real returns when inflation rises, while equity and bond real returns are negative. (ANI)