The World Gold Council predicts a significant increase in gold demand in 2024 due to geopolitical uncertainty, despite a slowdown in consumer demand. The record-high price in 2023 was influenced by factors such as the Israel-Hamas war and speculation about US interest rate cuts. Central bank buying and geopolitical instability are expected to drive gold demand this year.
LONDON: Gold demand will win a “pronounced” boost from geopolitical uncertainty this year, an industry report predicted Wednesday, after the precious metal and haven investment hit a record-high price in 2023.
The World Gold Council said the commodity would in 2024 continue to benefit from strong buying by central banks, which would help to offset a slowdown in consumer demand owing to elevated prices and weaker economic growth.
The price of gold hit an all-time high at $2,135.39 an ounce at the end of 2023, which sent demand sliding.
Gold demand retreated 12 percent in the final quarter — and by five percent over the year to 4,448 tonnes, WGC said.
The record price reached in December was in large part owing to the Israel-Hamas war, according to analysts.
It gained also from traders increasingly betting on the Federal Reserve cutting US interest rates this year, which dented the dollar.
A weaker greenback makes dollar-denominated gold cheaper for holders of other currencies.
“Unwavering demand from central banks has been supportive of gold,” noted Louise Street, senior markets analyst at WGC.
“In addition to monetary policy, geopolitical uncertainty is often a key driver of gold demand and in 2024 we expect this to have a pronounced impact on the market.
“Ongoing conflicts, trade tensions and over 60 elections taking place around the world, are likely to encourage investors to turn to gold for its proven track-record as a safe haven asset.”
Unearthing gold can be far from safe, however.
More than 70 people were killed after a tunnel collapsed at a Malian gold mining site earlier this month, local sources told AFP.
Two years ago, at least 59 people were killed in southwestern Burkina Faso after the explosion of a stockpile of dynamite at an artisanal gold mining site.
WGC said mine production rose one percent last year.
Recycling of the metal increased nine percent, which was lower than expected given the high price.
Despite record-high prices, “the global jewellery market proved to be remarkably resilient… as demand inched up by three tonnes year-on-year”, said WGC.
“China played an important role, recording a 17-percent increase in demand for gold, as it recovered from Covid-19 lockdowns.”
This offset a nine-percent decline in India’s demand for gold jewellery, it added.
The year 2024 is anticipated to witness a significant surge in the demand for gold as a safe haven asset, driven by the intersection of geopolitics and the financial industry. The ongoing geopolitical unrest and economic uncertainties across the globe are likely to reinforce the attractiveness of gold in the investment landscape. As geopolitical tensions continue to shape the geopolitical landscape, investors are increasingly turning to gold as a hedge against potential market volatility and currency depreciation.
With an array of geopolitical issues affecting global stability, the allure of gold as a reliable store of value and a refuge during times of crisis is poised to grow. As countries grapple with political and economic challenges, the role of gold as a ‘haven’ investment is becoming more pronounced, offering a sense of security and stability amidst uncertain times.
Furthermore, the gold industry is expected to witness an upsurge in demand, as geopolitical factors combined with market dynamics drive investors towards safe haven assets. As we look ahead to 2024, the interplay between geopolitics and the financial industry is likely to elevate gold to an increasingly prominent position in investment strategies worldwide.
In conclusion, the confluence of geopolitical disruptions and the search for stability in the global financial landscape is set to propel gold to new heights as a preferred investment choice in 2024. In light of the complex geopolitical environment, the significance of gold as a ‘haven’ asset is undeniably poised to take center stage, offering investors a reliable option to navigate the uncertainties of an ever-changing world.
Source: ARY NEWS
Summary:
Gold demand is expected to receive a significant boost in 2024 due to geopolitical uncertainty and increased buying by central banks. Despite a record-high price in 2023, a slowdown in consumer demand is anticipated, partly due to elevated prices and weaker economic growth. Geopolitical factors, ongoing conflicts, trade tensions, and over 60 elections worldwide are likely to drive investors towards gold as a safe haven asset. Additionally, gold mining presents risks, as evidenced by recent incidents in Mali and Burkina Faso. Despite challenges, the global jewellery market has shown resilience, with China’s demand for gold increasing and India’s declining due to Covid-19 lockdowns.
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