• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 4 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 3 days The United States produced more crude oil than any nation, at any time.
  • 2 days How Far Have We Really Gotten With Alternative Energy
  • 21 hours Bad news for e-cars keeps coming
  • 3 days China deletes leaked stats showing plunging birth rate for 2023
  • 4 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
ZeroHedge

ZeroHedge

The leading economics blog online covering financial issues, geopolitics and trading.

More Info

Premium Content

Central Banks' Appetite for Gold is Skyrocketing

  • Total gold demand in 2023, including OTC trade, peaked at 4,899 tonnes, setting a new record.
  • Central bank buying contributed over 21% to the total demand, with significant investments from Turkey, India, and the United States.
  • Economic uncertainties, geopolitical tensions, and the expectation of ongoing conflicts and elections worldwide are likely to keep gold demand high in 2024.
Gold Bars

Via SchiffGold.com,

Total gold demand hit an all-time high in 2023, according to a recent report released by the World Gold Council.

Last week, the World Gold Council (WGC) released its Gold Demand Trends report, which tracks developments in the demand for and use of gold around the world. Excluding over-the-counter (OTC) trade, 2023 gold demand fell slightly from 2022 to just under 4,500 tonnes. With OTC demand accounted for, last year’s demand peaked at 4,899 tonnes, the highest figure ever recorded.

Investment in bars and coins varied across the world. While demand in Europe fell in 2023, investment demand in India, Turkey, and the United States increased by 185, 160, and 113 tonnes, respectively. The WGC also notes that 2023 saw little overall change in gold mine production and stable demand in the jewelry sector.

Also of note was gold’s record high price at year-end. At $2,078.4 per oz, gold finished the year 15% higher than it started. Its average price throughout 2023— $1,940.53 per oz— also broke records, exceeding 2022’s average price by 8%.

In a year of monetary tumult, central bankers themselves turned to gold, driving over 21% (1,037 tonnes) of 2023’s total demand and nearly setting a new demand record of their own. Central banks often hold a share of their foreign reserves in gold as a bulwark to economic and geopolitical instability. The Federal Reserve, for example, holds nearly 70% of its foreign reserves in gold.

Turkey’s central bank increased its share of foreign reserves held in gold by 0.73% in Q4 of last year, which is by far the largest increase of any country. This increase is not surprising, since Turkey’s economy has suffered a series of blows since 2020; recent changes in central bank leadership, high inflation, and a weakening currency all contribute to the uncertainty that higher gold reserves may relieve.

Louise Street, a senior analyst at WGC, explains why economic uncertainty is likely to persist this year in a press release associated with the report:

“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.”

Street’s prediction came only days before Jerome Powell, the chair of the Federal Reserve, announced that the Fed would hold off on interest rate cuts as it evaluates persistent inflation that still plagues the economy. Powell had previously signaled the possibility of rate cuts sometime this spring, leading the market consensus to expect rate cuts at the Fed’s March 2024 meeting. During last week’s Federal Open Market Committee meeting, however, Powell expressed doubts that the Fed will have tamed inflation enough to cut rates in March.

The reaction to Powell’s announcement is illustrative of gold’s hedge against uncertainty. While the stock market plummeted in response to the Fed’s hesitance, the spot price of gold climbed the following day to $2,054 per oz, almost surpassing its 30-day high price.

This resilience is likely what Louise Street has in mind when she predicts high gold demand for the rest of 2024:

“We know that central banks often cite gold’s performance in times of crisis as a reason to buy, which suggests demand from this sector will stay high this year and may help to offset a slowdown in consumer demand due to elevated gold prices and slowing economic growth.”

ADVERTISEMENT

With the uncertainty of inflation, recessionary pressures, and political conflict around the world, gold may prove to be the best investment in 2024.

By Zerohedge.com 

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News