Whole demand for gold reached a document excessive in 2023, This is evident from a recent report from the World Gold Council.
Final week the World Gold Council (WGC) revealed its report Tendencies in gold demand report, which tracks developments within the demand and use of gold world wide. Excluding over-the-counter (OTC) buying and selling, gold demand in 2023 fell barely in comparison with 2022 to only below 4,500 tonnes. Bearing in mind OTC demand, demand peaked at 4,899 tonnes final 12 months, the very best determine ever recorded.
Investments in bars and cash different world wide. Whereas demand in Europe fell in 2023, funding demand in India, Turkey and the USA elevated by 185, 160 and 113 tonnes respectively. The WGC additionally notes this There was little overall change in gold mine production in 2023 and secure demand within the jewellery sector.
Additionally hanging was the document excessive worth of gold on the finish of the 12 months. At $2,078.4 per oz, gold ended the year 15% higher than it started. The common worth in 2023 – $1,940.53 per oz – additionally broke information, surpassing the 2022 common worth by 8%.
In a 12 months of financial turmoil, central bankers themselves have turned to gold, accounting for greater than 21% (1,037 tonnes) of complete demand in 2023 and virtually setting a brand new demand document. Central banks typically maintain a part of their international reserves in gold as a bulwark towards financial and geopolitical instability. For instance, the Federal Reserve has holds almost 70% of its foreign reserves in gold.
The Turkish central bank has increased its share of foreign reserves in gold by 0.73% within the fourth quarter of final 12 months, which is by far the most important enhance of any nation. This enhance isn’t a surprise because the Turkish economic system has taken a collection of hits since 2020; recent changes in central bank leadership, high inflation and a weakening currency all of them contribute to the uncertainty that increased gold reserves can take away.
Louise Road, senior analyst at WGC, explains why Economic uncertainty is likely to persist this year in a press launch accompanying the report:
“Along with financial coverage, geopolitical uncertainty is commonly a key driver of gold demand, and in 2024 we anticipate this to have a pronounced affect in the marketplace. Ongoing conflicts, commerce tensions and greater than 60 elections happening world wide are prone to encourage traders to show to gold resulting from its confirmed observe document as a secure haven.”
Road’s prediction got here simply days earlier than Federal Reserve Chairman Jerome Powell introduced it The Fed would postpone interest rate cuts because it evaluates persistent inflation that continues to plague the economy. Powell had beforehand hinted at the potential for charge cuts someday this spring, leading the market consensus to expect interest rate cuts on the March 2024 Fed assembly. Nevertheless, ultimately week’s Federal Open Market Committee assembly, Powell expressed doubts that the Fed may have tamed inflation sufficient to chop charges in March.
The response to Powell’s announcement is illustrative of gold’s safety towards uncertainty. Because the inventory market tumbled in response to the Fed’s hesitation, the spot worth of gold climbed to $2,054 per oz the following day, almost surpassing a 30-day excessive.
This resilience is probably going what Louise Road has in thoughts when predicting excessive gold demand for the rest of 2024:
“We all know that central banks typically cite gold’s efficiency in instances of disaster as a cause to purchase, which means that demand from this sector will stay sturdy this 12 months and will assist offset a slowdown in shopper demand as a result of excessive gold costs and slowing financial progress. .”
With inflation uncertainty, recessionary pressures and political conflicts world wide, gold might show to be the most effective funding in 2024.