The demand for gold around the world reached an astonishing 4,974 tonnes in 2024, hitting an all-time highIn the fourth quarter of that year alone, the demand for gold soared to 1,297 tonnes, showcasing a slight increase of one percent year-on-year, again establishing a record for quarterly demandSuch figures vividly illustrate the persistent allure of gold as a coveted asset, especially amid fluctuating economic and geopolitical climates.
This remarkable surge in demand coincided with a notable uptick in international gold pricesSince the beginning of the year, gold has exhibited a strong performance, achieving a consecutive five-week rise with the spot gold and COMEX gold prices both surging over eight percentOn January 31, the price of London spot gold transcended the $2,800 per ounce mark for the first time, and on February 5, COMEX gold prices reached an unprecedented $2,900 per ounceThese historic price breakthroughs suggest an intense market engagement with gold, reflecting both investor confidence and market dynamics.
Industry experts point to various underlying factors contributing to the rising demand for goldIncreased uncertainty regarding US Federal Reserve policies, combined with central banks from multiple countries ramping up their gold holdings, has sustained the high demand for gold in the marketThese strategic moves are critical as they not only indicate central banks' shift towards more stable assets but also reflect broader economic anxieties.
Looking at the macroeconomic landscape, the macroeconomic team from Zhejiang Merchants Futures remarked that the combination of rising global uncertainty and inflation expectations is driving gold prices to greater heightsTrade tensions, particularly increased tariffs set by the United States, have led to a surge in market risk aversion, prompting investors to allocate more towards safe-haven assets such as gold.
Yang Delong, the chief economist at Qianhai Kaiyuan Fund, opined that global geopolitical issues are heightening feelings of uncertainty among investors, which in turn is pushing gold prices upward
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He pointed out that the long-term trend of rising gold prices is largely influenced by the increasing quantity of US dollars in circulationThe Federal Reserve's strategy to stimulate the economy by expanding the money supply implies that gold's price—denominated in dollars—will likely continue on an upward trajectory in the long run.
Focusing on the domestic market, the China Gold Association recently published data illustrating that the gold market in China is rapidly evolved despite the volatile pricesFor the year 2024, the trading volume and turnover related to gold show significant growthThe total trading volume across all gold varieties on the Shanghai Gold Exchange reached 62,300 tonnes, showcasing a robust year-on-year increase of nearly 50%. What’s more, the trading volume at the Shanghai Futures Exchange also indicated a booming market, climbing to 182,200 tonnes, which represented nearly a 47% increase compared with the previous yearThese figures are telling of how Chinese investors are engaging with the gold market amid its fluctuations.
On the consumer front, however, the high price of gold has slightly tempered the demand for gold jewelryIn 2024, China’s gold consumption was recorded at 985.31 tonnes, which signifies a year-on-year decline of around 9.58%. Notably, the segment of gold jewelry saw a more pronounced drop, falling by nearly 25% to 532.02 tonnesInterestingly, sales of gold bars and coins, however, rose 24.54%, demonstrating a shift in consumer behavior towards investing in physical gold as a safety net against economic uncertaintiesThis pattern reflects a broader trend wherein traditional demands are evolving in response to external pressures and market conditions.
Looking ahead, expectations concerning the demand for gold remain optimisticThe World Gold Council has projected that central bank purchases of gold will still dominate the market in 2025, while investment demand through gold ETFs is anticipated to play a vital role in maintaining gold's attractiveness
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