Gold Prices to Remain Elevated Over Medium, Strengthen Ghana’s Reserves – Fitch Solutions
Fitch Solutions has projected that gold prices will remain elevated relative to historical averages over the medium term, a development expected to bolster Ghana’s foreign reserves and potentially influence government policy direction.
In its latest Sub-Saharan Africa Monthly Outlook, the UK-based research and risk analysis firm noted that the sustained rise in gold prices will carry significant political and economic implications for countries across the region, including Ghana, where gold remains the top export commodity, accounting for about 40% of total exports.
“We think that high gold prices will have a broad range of political implications in Sub-Saharan Africa, given that most countries in the region export at least some gold,” the firm observed.
Fitch Solutions stated that high gold prices have pushed up reserves, adding that the increased earnings from gold exports will embolden the Government to pursue greater policy risks.
The firm forecasts that Ghana’s current account surplus will widen from 4.2% of Gross Domestic Product (GDP) in 2024 to 5.8% in 2025, largely on the back of robust gold prices and higher export receipts.
Reserves are projected to climb sharply from $6.4 billion in 2024 to $11.6 billion by end-2025, providing the country with a comfortable import cover of 4.8 months.
Fitch Solutions attributed the global surge in gold prices to heightened geopolitical tensions, shifts in US trade policy under the Trump administration, ongoing global economic uncertainty, and increased gold purchases by central banks worldwide.
For Ghana, the anticipated boost to foreign exchange reserves could provide the much-needed support for the cedi, while enhancing the government’s fiscal space to implement policy initiatives critical to sustaining economic recovery.
