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Global Gold Demand Hits Record High in 2024

Gold demand surges as central banks and investors seek safe-haven assets.

The Gold Market: A Review of Demand and Outlook

The gold market has experienced a significant surge in demand over the past few years, with the total value of demand reaching an impressive USD 382 billion. This upward trend is largely attributed to the actions of central banks and the increasing investment demand for gold.

Central Bank Purchases: A Key Driver of Demand

Central banks have played a crucial role in driving the surge in gold demand. In recent years, many central banks have turned to gold as a safe-haven asset, seeking to diversify their reserves and hedge against inflation and currency fluctuations. This has led to a significant increase in gold purchases by central banks, with many countries, including China, Russia, and India, actively buying gold to strengthen their economies. Key statistics: + Total value of gold demand: USD 382 billion + Central bank purchases: significant increase in recent years + Countries actively buying gold: China, Russia, India, and others

Investment Demand: A Growing Segment

Investment demand for gold has also been a major driver of the surge in demand. As investors seek to diversify their portfolios and hedge against market volatility, gold has become an increasingly popular choice. This is particularly true for investors in emerging markets, where gold is often seen as a safe-haven asset.

Central banks are buying gold to diversify, hedge, and stabilize.

The Rise of Central Bank Gold Purchases

In recent years, central banks have been actively purchasing gold, a trend that has been gaining momentum. This surge in central bank gold purchases has been driven by a combination of factors, including a desire to diversify their foreign exchange reserves, hedge against inflation, and stabilize their currencies.

Key Drivers of Central Bank Gold Purchases

  • Diversification of foreign exchange reserves: Central banks have been seeking to reduce their dependence on the US dollar and other major currencies. By purchasing gold, they can diversify their reserves and reduce their exposure to currency fluctuations. Hedge against inflation: Gold is often seen as a hedge against inflation, as its value tends to increase when inflation rises. Central banks may purchase gold to protect their reserves from the erosive effects of inflation. Stabilization of currencies: Central banks may purchase gold to stabilize their currencies, particularly in countries with high inflation rates or currency fluctuations.

    The Rise of Gold ETFs: A Shift in Investor Preferences

    The past few years have witnessed a significant shift in investor preferences, with gold ETFs emerging as a popular choice for investors seeking to diversify their portfolios. According to recent data, gold ETFs added 19 tonnes in Q4 2024, marking the second consecutive quarter of inflows. This trend is a testament to the growing demand for gold-backed investments, which are seen as a hedge against inflation, currency fluctuations, and market volatility.

    Key Statistics

  • Gold ETFs have seen a significant increase in inflows over the past few years, with a total of 19 tonnes added in Q4 Bar and coin demand remained stable at 1,186 tonnes, in line with 2023 levels. The total gold demand in Q4 2024 was 1,207 tonnes, a 5% increase from the previous quarter. ## The Benefits of Gold ETFs*

    • The Benefits of Gold ETFs

    Gold ETFs offer a range of benefits to investors, including:

  • Diversification: Gold ETFs provide a way to diversify a portfolio, reducing reliance on traditional assets such as stocks and bonds. Liquidity: Gold ETFs are highly liquid, allowing investors to easily buy and sell shares. Low Cost: Gold ETFs have lower costs compared to other investment options, such as physical gold. * Convenience: Gold ETFs can be easily held in a brokerage account, eliminating the need for physical storage.

    India’s Investment Demand Surges to Record Highs in 2022.

    India’s Investment Demand: A Record-Breaking Year

    The Indian economy has witnessed a significant surge in investment demand, with a record-breaking year in 2022. According to the latest data, the country’s investment demand has increased by 29 per cent year-on-year to 239.4 tonnes, marking a substantial growth in the sector.

    Key Statistics

  • Investment demand: 4 tonnes (up 29% year-on-year)
  • Value of investment demand: Rs1,53,700 crore (up 61% year-on-year)
  • Growth rate: 29% year-on-year
  • Value growth: 61% year-on-year

    • Factors Contributing to the Surge

    Several factors have contributed to the surge in investment demand in India. Some of the key factors include:

  • Infrastructure development: The government’s focus on infrastructure development has led to an increase in investment demand. The construction of new roads, bridges, and other infrastructure projects has created a high demand for steel and other construction materials. Industrial growth: The growth of industries such as manufacturing, textiles, and automotive has also led to an increase in investment demand. These industries require large amounts of steel and other materials to operate, leading to a surge in demand.

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