Is the Demand for Gold Increasing?

The demand for gold has been on a notable rise in 2024, driven by a complex interplay of geopolitical tensions, economic uncertainty, and strategic investments by emerging markets and developing economies (EMDEs). The World Bank’s precious metals price index climbed 9 percent in April 2024, marking a continuation of the upward trend seen since the first quarter. This surge underscores gold's enduring appeal as a safe-haven asset, especially during times of heightened global instability.

A Record-Breaking Year for Gold

In April 2024, gold prices reached an all-time nominal high of $2,331 per troy ounce. This milestone reflects a 7 percent increase in the first quarter of the year and builds upon a period of elevated prices that began in 2020. The recent surge in gold prices has been largely supported by robust demand from several EMDE central banks, particularly in response to ongoing geopolitical uncertainties.

Central banks in China, India, and Türkiye have been at the forefront of this trend, with China’s central bank extending its gold purchasing streak to 17 consecutive months as of March 2024. This record-setting buying spree has been instrumental in bolstering global demand for gold.

While central bank purchases have been a significant driver of gold's price surge, other sectors, such as jewelry, technology, and private investment, have shown relatively subdued demand in the first quarter of 2024. Nonetheless, gold prices are projected to be 8 percent higher in 2024 compared to 2023, supported by continued strong demand from central banks in EMDEs, retail investments (where gold jewelry often serves as a quasi-investment), and the persistent demand for gold as a safe-haven asset.

The Future Demand for Gold and Other Precious Metals

As we move further into 2024, the outlook for gold and other precious metals remains positive. The World Bank's index forecasts an 8 percent increase in precious metals prices for the year, compared to 2023. This anticipated growth is primarily driven by continued strong demand from EMDE central banks, which are likely to maintain their strategic gold purchases amid ongoing geopolitical and economic uncertainties. Here you can read more about strategies for trading and investing in gold.

For silver and platinum, the outlook is also encouraging, with prices expected to increase by 7 percent and 4 percent, respectively, in 2024. The demand for these metals will be supported by industrial applications, including the expanding use of silver in electronics and renewable energy, and the sustained importance of platinum in the automotive sector.

Conclusion

The demand for gold is undoubtedly on the rise, fueled by a combination of geopolitical tensions, strategic central bank purchases, and economic uncertainties. This trend is not limited to gold alone; silver and platinum are also experiencing price increases, driven by industrial demand and supply constraints.

For investors considering precious metals as part of their portfolio, now may be an opportune time to explore these assets. If you're thinking of investing in gold or other precious metals, SmartT offers a simple and accessible platform to get started. By registering to SmartT, you can easily incorporate these valuable assets into your investment strategy, helping to secure your financial future in these uncertain times.