Gold Demand Surges to New Records amid Safe-Haven Buying
Gold demand has reached unprecedented levels, driven by massive purchases from central banks and investors seeking refuge from escalating tariffs. On Wednesday, gold hit consecutive record highs, surpassing $2,877 per ounce, while futures climbed above $2,900.
According to the World Gold Council, central banks' voracious appetite for gold in 2024 was fueled by inflation concerns, geopolitical tensions, and portfolio diversification needs. Purchases surged particularly in the fourth quarter, contributing to a record-breaking annual demand of 4,974 tonnes.
The Federal Reserve's rate-cutting cycle has fueled global inflows into physical-backed gold exchange-traded funds (ETFs), particularly from Western investors. Lower interest rates favor gold as it does not compete with yield-bearing assets. Global ETF demand stabilized in 2024, marking the first year since 2020 without significant outflows.
Year-to-date, gold has appreciated by approximately 8%, surpassing the S&P 500's 23.1% gain. Goldman Sachs analysts remain bullish, predicting a price target of $3,000 per troy ounce in Q2 2026 due to persistent central bank buying and ETF demand.
Despite the recent delay in US tariffs against Mexico and Canada, tariffs on Chinese imports went into effect on Tuesday. Joe Cavatoni of the World Gold Council anticipates continued central bank involvement and additional Western investor demand for gold ETFs if rate cuts resume.