In its latest update, the World Gold Council has outlined several factors which it says will be long term supports for gold through the balance of the year. It believes there are multiple elements at play which will help to boost and then preserve higher gold prices as we move deeper into 2024. This outlook further supports the belief that the bulls will smash several records over the course of the next 12 months as part of a more sustained upward trajectory that could carry well into 2025.
The World Gold Council expects that the year will be shrouded in some degree of uncertainty, which will ensure that the yellow metal remains an attractive prospect for risk averse investors.
The World Gold Council’s Senior Market’s Analyst, Louise Street explained there is much to bolster solid price performance, even as the exact date and breadth of the much anticipated rate cuts remains unknown.
One of the central pillars of support is expected to come from central banks, which all appear primed to continue their bullion buying sprees. “Unwavering demand from central banks has been supportive of gold demand,” she said. Confirming that the level of demand in 2023 was well above the ten-year moving average, Street expects to see more of the same this year, which will keep prices moving in the right direction.
She added, “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.”
Street’s comments come on the back of the World Gold Council’s Gold Demand Trends Full Year 2023 report, which described the pace of central bank purchases as ‘blistering’. It confirmed that, “Inclusive of significant OTC and stock flows (398t), total gold demand in 2023 was the highest on record at 4,899t. Central bank buying maintained a breakneck pace. Annual net purchases of 1,037t almost matched the 2022 record, falling just 45t short.”
There are a number of other long term supports which are also in play and should give the bulls a safety net in 2024.
“Geopolitical uncertainty is often a key driver of gold demand and in 2024 we expect this to have a pronounced impact on the market,” Street added. “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.”
The Gold Demand Trends Full Year 2023 report shows that gold prices are primed to spike after a record performance to close last year. “The LBMA (PM) gold price ended 2023 at £1,648/oz ($2,078/oz) – a record high year-end close – generating an annual return of 15%. The average 2023 gold price of £1,538/oz ($1,940/oz)– also a record – was 8% higher than 2022,” it reports.
This high baseline sets the bar for even more astonishing price records in 2024. Don’t wait for the bulls to run. Buy now.
