Gold Demand Surges Amid Safe-Haven Appeal
Driven by central bank purchases and investor demand, gold demand has soared to record levels. On Wednesday, gold hit consecutive daily highs, surpassing $2,877 per ounce, while futures climbed above $2,900.
The World Gold Council reports an unprecedented demand in 2024, with central banks accumulating gold at a rapid pace. Total demand reached a record 4,974 tonnes last year.
Central bank purchases are spurred by inflation concerns, geopolitical tensions, and portfolio diversification needs. The Federal Reserve's rate cuts have encouraged global inflows into gold-backed ETFs, as lower interest rates reduce competition from yield-bearing assets.
Despite heavy outflows in previous years, global ETF demand has stabilized in 2024, with holdings remaining largely unchanged.
Gold has outperformed the S&P 500 in 2024, gaining approximately 8% year-to-date and 27% in 2024. Goldman Sachs analysts maintain a bullish outlook, forecasting a price of $3,000 per troy ounce in Q2 2026.
While US tariffs on Mexico and Canada have been delayed, additional tariffs on Chinese imports have been implemented. Gold demand in 2025 depends on US policy, including Fed rate cuts and the impact of tariffs.
Central bank purchases remain strong, while Western investors may increase ETF demand if rate cuts resume.