Online Reporter
Martin Kadzere
ZIMBABWE must “aggressively maximise” gold production to capitalise on the global commodity boom while hedging against a potential price crash if world political dynamics shift, analysts have said.
The call comes at a time when prices of the yellow metal have maintained an upward trajectory, driven by a complex mix of global macroeconomic pressures, aggressive central bank reserve-building and heightened geopolitical tensions.
Gold has surged by roughly 15 percent this month, hitting US$4 651 an ounce on Tuesday, putting the metal on track for its strongest monthly performance since September 1999.
Speaking on the dynamics of the global bullion market, economic analysts noted that while current price projections point towards sustained gains in the near term, Zimbabwe’s high export concentration leaves the country vulnerable to external policy shifts.
Gold remains the central pillar of the country’s trade balance, anchoring half of total export revenues and driving current foreign currency inflows. The sharp increase in bullion prices gained significant momentum after United States President Donald Trump took office, driven by three primary global catalysts.
To begin with, the geopolitical weaponisation of the dollar played a major role.
Following US sanctions that froze billions in dollar-denominated assets in Russia, global central banks increasingly viewed holding greenbacks as a strategic liability.
Led by China and India, central banks aggressively ditched dollar reserves in favour of physical gold to preserve value.
Compounding this issue, US macroeconomic debt and interest rates pushed prices upwards.
A ballooning US debt, exacerbated by global conflict financing, has fundamentally weakened the US dollar. Low Federal Reserve interest rates and inflation, which hit 3,5 percent in March 2024, have further stripped the dollar of yield attractiveness.
Adding to the pressure, aggressive trade tariffs disrupted global commerce.
Broad-based tariffs implemented by the Trump administration disrupted multilateral trade, clouding the US economic outlook and cementing gold’s status as the ultimate safe-haven asset.
Major global investment and financial institutions project that bullion could double in the coming cycles.
J.P. Morgan Global Research projects that gold could reach US$6 300 per ounce.
Despite the bullish outlook, analysts caution that the primary threat to the gold bull run lies in the upcoming US elections. Should the Trump administration lose to an alternative government, global risk premiums could rapidly soften.
A less aggressive administration would likely seek to restore traditional international diplomatic ties, ease tariff tensions and address federal debt dynamics, which would cause the geopolitical premium on gold to plummet back towards US$1 800 per ounce.
For Zimbabwe, such a slump poses a severe macroeconomic hazard, because gold accounts for roughly 50 percent of the country’s total annual export earnings, and a price correction would wipe out significant national export revenues.
Economists urge the Reserve Bank of Zimbabwe to maintain a carefully calibrated reserve framework. While holding physical gold in central bank vaults remains critical, the authorities must balance portfolios with foreign currency liquidity to avoid being caught unawares by potential price corrections.
“We need to sweat our gold assets right now,” economist Mr Milton Mayor told this publication. “We shouldn’t just hoard massive amounts of gold only to sit on devalued reserves if prices plummet.
“We must mine as much as we can during this commodity boom, extract maximum value and direct those proceeds to build long-term capacity across other key economic sectors.”
While retaining gold reserves is non-negotiable, analyst Mr Enock Musara said, central bank holdings require strong risk management.
“There is no way we can’t have gold reserves,” he said.
“But I think our proportion in terms of the share of gold which is in the central bank should also be managed with proper risk mitigation and a sound risk framework mechanism, so that we are insulated from the potential decline in gold, maybe in 2028.”
The international price boom coincides with record-breaking output on the domestic front, placing Zimbabwe in a prime position to capitalise on the rally.
Official figures from the central bank show that gold export receipts surged by 61 percent to reach US$2,18 billion during the first seven months of the year, compared with US$1,36 billion recorded over the same period in the prior year.
During this seven-month period, total gold export shipments reached 26,54 tonnes, with July recording the highest monthly volume of the year at 5,14 tonnes.
Driven overwhelmingly by artisanal and small-scale miners, who contribute over 70 percent of output, total deliveries to Fidelity Gold Refinery reached 21,39 tonnes in the first half of the year.
Full-year deliveries are on track to reach between 50 tonnes and 55 tonnes.
These strong foreign currency inflows have significantly strengthened the asset backing of the local currency, Zimbabwe Gold (ZiG).
However, market observers stress that current record deliveries must be matched by structural diversification before global macroeconomic tides turn.
