Gold demand surged to a document excessive in 2024, pushed by shopping for from central banks and particular person buyers.
Information from the World Gold Council’s (WGC) newest report on gold demand reveals that in 2024, complete annual demand for gold, together with over-the-counter transactions, reached a record-breaking 4,974 metric tons (MT).
Annual demand was up by 1 % year-on-year from 2023’s 4,945.9 MT.
Central banks added greater than 1,000 MT of gold to their reserves for the third consecutive yr, whereas funding demand hit a 4 yr excessive, supported by a robust efficiency in gold exchange-traded funds (ETFs).
Central banks lead gold demand
Central banks remained the most important drivers of gold demand in 2024. As a gaggle, they made cumulative internet purchases of 1,045 MT in 2024, with the fourth quarter alone accounting for 333 MT.
The Nationwide Financial institution of Poland led the upsurge, buying 90 MT of the yellow steel in 2024, whereas different rising market central banks additionally contributed considerably to the general complete.
This heightened demand from central banks marks a steady shift within the international financial system, with central banks more and more favoring gold as a hedge in opposition to foreign money volatility and geopolitical tensions.
2024 was the third yr in a row through which central banks’ gold purchases exceeded 1,000 MT, marking a notable enhance in comparison with the pre-2022 common of 473 MT.
Regardless of questions on future demand, central banks are anticipated to keep up their buying momentum into 2025, notably as geopolitical dangers proceed to affect coverage selections.
Investor demand helps gold ETF development
Gold’s enchantment to particular person buyers additionally remained strong in 2024, notably in gold ETFs.
Funding demand for the valuable steel reached 1,180 MT for the yr, a 25 % enhance from 2023, with ETFs drawing vital inflows, particularly within the second half of the yr. These inflows had been pushed by components together with decrease rates of interest, geopolitical instability and a strengthening gold value.
In distinction to the earlier three years, throughout which gold ETFs skilled substantial outflows, 2024 noticed near-stagnant holdings by the top of the yr, exhibiting a marked shift in investor sentiment.
Market contributors more and more turned to gold as a protected haven, and the US market specifically witnessed appreciable ETF inflows, pushed by the relative weak point of the US greenback and issues over inflation.
Gold jewellery demand struggles as value climbs
Whereas funding demand soared, the jewellery sector struggled in 2024, with international jewellery consumption falling by 11 % to 1,877 MT. The numerous gold value rise in the course of the yr led to decrease volumes of gold jewellery being bought, as customers discovered it more and more troublesome to afford the yellow steel.
The weak point in jewellery demand was international, although India noticed comparatively smaller declines in comparison with China, which skilled a big drop of 24 % from 2023.
Nevertheless, the worth of gold jewellery consumption elevated by 9 %, reaching a document excessive of US$144 billion. This allowed jewelers to attain larger gross sales figures, with a marked distinction between demand quantity and worth.
Know-how and industrial demand will increase
Within the expertise sector, demand for gold grew by 7 % in 2024, which the WGC attributes largely to the growing adoption of synthetic intelligence (AI) infrastructure.
Gold utilized in electronics rose by 9 % year-on-year, contributing to the expertise sector’s strong demand. General, complete annual gold demand from the tech sector got here to 326 MT.
Whereas gold’s position in industrial functions is a smaller portion of total demand, its utilization in superior applied sciences continues to develop, underlining its significance in cutting-edge sectors like AI, electronics and renewable power.
Gold mine and recycling provide rise
Gold provide noticed modest development in 2024, rising by 1 % to a document 4,974 MT, a brand new excessive for the information sequence. Each mine manufacturing and recycling had been up in comparison with the prior yr, with recycling climbing 11 %.
The WGC states that the outlook for gold provide stays sturdy, with expectations for strong mine manufacturing and potential will increase in recycling charges within the coming yr.
The gold value reached a median of US$2,386 per ounce in 2024, a 23 % enhance from the earlier yr. In This fall, the typical value peaked at US$2,663, contributing to a complete worth of US$111 billion for the quarter.
What’s driving gold’s document value highs?
The WGC’s report comes because the gold value hits new information, and in an interview with the Investing Information Community, Joe Cavatoni, senior market strategist, Americas, on the WGC, make clear the steel’s value drivers.
“I feel many buyers are seeing the advantages and the deserves of getting gold as a diversifying asset of their portfolio,” he stated. “I feel they’re understanding that the danger shocks you may see to danger belongings will proceed to be one thing that may develop over the following two to a few months at a minimal as we begin to hear and see insurance policies unpacked.”
Watch Cavatoni talk about the WGC’s newest report.
Cavatoni additionally pointed to expectations of decrease rates of interest as a motivating power for gold.
“All of these components are stacking as much as proceed to be a really sturdy efficiency driver for gold,” he stated.
Tariff uncertainty can also be contributing to gold’s motion. The US has positioned extra tariffs on China, and though it is deferred tariffs on Canada and Mexico in the interim, a lot uncertainty stays.
In Cavatoni’s opinion, will probably be key for sector contributors to tune out distractions.
“I feel the important thing factor proper now could be that you would be able to clearly see the advantages of gold in a portfolio that is diversified. You possibly can see the advantages of getting it as a element of your allocation mentality, and I feel total what I would say is that shoppers, buyers and those that perceive the gold market want to grasp there will be lots of noise,” he famous.
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Securities Disclosure: I, Giann Liguid, maintain no direct funding curiosity in any firm talked about on this article.
Editorial Disclosure: The Investing Information Community doesn’t assure the accuracy or thoroughness of the knowledge reported within the interviews it conducts. The opinions expressed in these interviews don’t replicate the opinions of the Investing Information Community and don’t represent funding recommendation. All readers are inspired to carry out their very own due diligence.
