African producers hope for boost from gold surge

The price of gold has hit record highs as global investors rotate out of the US dollar and into the “safe haven” commodity, raising hopes that Africa’s gold-exporters could see a boost to their economies.

Gold is now trading at a historic high of around $3,350 per troy ounce and has strengthened by more than 25% since the start of the year. The price of gold appears to be benefiting from reduced confidence in the US dollar as a result of President Trump imposing sweeping universal tariffs.

Indeed, the ICE US Dollar Index, the leading benchmark for measuring the international value of the dollar, is down over 8% since January.

While the greenback or dollar-denominated assets such as Treasury bills tend to be perceived as extremely safe investments, political and economic risks in the US have caused some investors to reconsider – and opt instead for gold.

Oliver Blagden, a gold and base metals analyst at CRU Group in London, tells African Business that “confidence in the US dollar is definitely a major contributor driving gold prices.”

“Recent events and policies from the White House have triggered chaos in global markets. Uncertainty and risk in stocks and bonds is up, and sentiment is down, which has caused significant investment in gold,” he says.

“The events of recent weeks have reminded us that the traditional attitude of putting money into gold during times of uncertainty is still strong – gold is viewed as a safe, stable asset globally,” Blagden adds.

Welcome news for gold miners

Stronger gold prices are welcome news for Africa’s major gold exporters such as Ghana, South Africa, Mali, and Burkina Faso. In 2023 the continent accounted for around 25% of global gold output, producing approximately 840 metric tonnes of the precious metal.

Gold exports play a particularly vital role in West African economies such as that of Ghana. In 2024, gold production contributed more than 12% to the country’s GDP. In the same year, exports of the commodity accounted for almost 60% of the country’s total export revenue and are therefore a critical source of foreign exchange.

A period of higher gold prices could therefore allow Africa’s gold exporters, including Ghana, to benefit from higher foreign exchange earnings. In turn, this could boost central banks’ foreign reserves and stabilise domestic currencies. Higher government revenue from taxes paid by gold producers and mining companies could also ease fiscal pressures and support public investment initiatives.

Countries look to de-dollarise

Blagden suggests the long-term outlook for gold is “looking very bullish.” He notes that Trump’s trade wars have given an additional incentive for many countries – particularly the BRICS group of emerging economies – to seek economic “independence” from the US. To this end, central banks are increasingly diversifying away from the greenback and replacing it with gold. Central banks have collectively bought over 1,000 tonnes of gold annually since 2022 and are set to do the same this year.

“De-dollarisation has become more prominent in recent years, as BRICS countries look to become less reliant on the US dollar and economy,” Blagden tells African Business.

“The past few weeks have been a wake-up call for the entire world as countries look towards “independence” from the US – whether that is currency or trade related,” he says. “This is a huge upside for gold.”

Most analysts expect the price of gold to continue rising from its current level. Goldman Sachs sees the price hitting $3,700 per ounce by the end of 2025 – and notes that in extreme scenarios, it could even hit $4,500/oz. Morgan Stanley has predicted $3,400 by year-end, with UBS suggesting it will be slightly higher at around $3,500/oz.

Blagden says that “it is difficult to tell what the next move from the Oval Office will be, which creates more uncertainty.”

“I don’t think it will go above $4,000/oz as some people are saying,” he notes. “However, the potential for it to go up from here is still very strong.”