Gold Buying Expected to Hit New Record

Demand for gold will hit a new all-time high this year after breaking records in 2023, according to the World Gold Council (WGC). Gold buying jumped by three percent to nearly 4,900 metric tons last year, driven by major central bank purchases, as well as strong demand in the somewhat secretive over-the-counter (OTC) market.

Central banks bought 1,037 tons of gold in 2023, just shy of the record set in 2022. OTC demand, which involves trading between hedge funds, sovereign government funds, and ultra-high-net-worth individuals, saw a seven-fold increase to 450 tons. Bar and coin demand remained strong at 1,190 tons, and gold jewelry buying reached 2,093 tons, even as the gold price jumped above $2,000 an ounce.

Leading central banks will continue their policies of shifting assets from U.S. dollars towards gold, predicts the WGC, a strategy that should gain popularity as the U.S. Federal Reserve begins lowering short-term interest rates. Economic troubles in China, particularly the country’s stumbling real estate market, will maintain strong demand within the OTC market. Yet another supporting factor for gold is the persistence of high geopolitical tension, from the Russia-Ukraine war to worries of an expanding war in the Middle East to Taiwan’s resistance to a Chinese aggression.

In the United States, the WGC sees the widely-anticipated soft economic landing to be mildly positive for gold, with additional support coming from a flat U.S. dollar and an anticipated decline in long-term interest rates.