Record Demand for Gold Fueled by Central Banks and Global Investors in 2024

Gold has emerged as an increasingly sought-after asset in 2024, with demand reaching unprecedented levels. According to a newly released report by the World Gold Council (WGC), total gold demand surged to 4,974 tonnes, translating to a staggering valuation of $382 billion. This surge comes amid a notable increase in gold prices, which climbed by 26% over the year.

Central Banks Lead the Charge

Central banks have played a pivotal role in driving gold demand, purchasing over 1,000 tonnes of gold for the third consecutive year. This trend signifies a marked shift as nation-states prioritize gold reserves in favor of traditional reserve currencies such as the U.S. dollar. Louise Street, an analyst at the WGC, highlighted that gold’s historical performance during crises and its lack of default risk are significant factors for central banks choosing to hold gold.

Among the individual central banks, the National Bank of Poland was the most proactive, increasing its gold reserves by 90 tonnes over the course of 2024. Following closely, the central banks of Turkey and India added 75 tonnes and 73 tonnes, respectively. The report identified that the majority of this demand from central banks was concentrated in non-Western and developing economies.

Rise in Private Investment

Alongside central banks, global private investment in gold also saw a resurgence, hitting a four-year high. However, the demand varied across regions. Price-sensitive investors from the United States and Europe exhibited a trend of decline, with four consecutive quarters of year-on-year drops, as many opted to secure gains from previous rallies in gold prices. Conversely, investors from China, India, and other major developing economies notably bolstered overall demand, offsetting declines in the Western markets.

This shift is seen as indicative of broader economic and geopolitical uncertainties that continue to push investors toward gold as a safe haven asset.

A 2025 Outlook

The report’s findings align with a rising trend of investors turning to gold amid ongoing geopolitical tensions and economic fluctuation. As noted by Street, anxiety surrounding geopolitical uncertainty is shifting focus; while armed conflicts remain a concern, there is a growing emphasis on trade-related conflicts.

On a noteworthy day earlier this week, the price of gold peaked at an all-time high, exceeding £2,280 per Troy ounce for the first time. This rally was largely attributed to uncertainties surrounding international trade policies, including speculation about Donald Trump’s tariff plans.

In summary, the data revealed in the WGC report underscores a significant shift in how both central banks and private investors view gold amidst a climate of instability, a trend likely to continue into 2025 and beyond. As global uncertainties loom, the allure of gold as a reliable asset is set to remain strong.