World Gold Council: With support from central bank purchases, gold is expected to continue to reach new historical highs in 2024.

Global central banks continue to buy gold, and with the prospect of interest rate cuts, the World Gold Council predicts that gold demand will further rise by 2024 after reaching a new high last year.

Gold Demand Reached a 13-Year High Last Year

On January 31st, the World Gold Council stated in a report that due to strong demand in the over-the-counter trading market and continuous central bank buying, gold consumption in 2023 increased by about 3% to reach 4,899 tons, the highest level since 2010.

Joseph Cavatoni, Chief Market Strategist at the World Gold Council, told the media that emerging market central banks continued to be net buyers, with China, Poland, and Singapore ranking in the top three in terms of gold purchases based on published data.

The sources of gold statistics compiled by the World Gold Council include gold bar investments, jewelry, coins, central bank purchases, ETFs, and over-the-counter trading activities.

Due to political and economic uncertainties, geopolitical tensions, and expectations of a shift towards loose monetary policy by the Federal Reserve, gold prices rose by 13% last year, reaching a record high in early December.

Cavatoni also believes that investors are expected to continue accumulating gold this year, mainly driven by expectations of loose monetary policy by the Federal Reserve.

Gold prices and the US dollar have an inverse relationship, so during interest rate cuts, a decline in the US dollar and bond yields usually benefits gold and attracts investors to buy.

Gold Prices Expected to Break $2,200 or Even Higher, But Jewelry Demand Remains Weak

Data from the World Gold Council shows that demand in the over-the-counter trading market grew by 753% last year, the highest since 2011.

The organization stated in the report that central bank purchases maintained an astonishing pace, with a net purchase of 1,037 tons for the whole year, only 45 tons away from the record set in 2022. It is expected that central bank purchases will exceed 500 tons this year.

The expected surge in over-the-counter trading and central bank gold buying is expected to offset the weakness in gold ETFs. Cavatoni believes that these factors will provide strong upward momentum for gold prices, with the price per ounce expected to reach $2,200 or even higher.

However, on the other hand, jewelry demand remains relatively weak. According to the World Gold Council, with the impact of economic slowdown and high prices becoming apparent, jewelry demand may face challenges this year, with gold consumption in the jewelry industry expected to be 2,093 tons in 2023.

P.R. Somasundaram, Managing Director of the World Gold Council in India, believes that as the economy grows and Indian residents' income increases, it will support a rebound in local gold jewelry demand. He pointed out that despite the sharp increase in gold prices, gold jewelry sales in India have remained stable in recent years.