Gold Prices Soar to Record Highs in 2024

Gold prices have surged to new record highs in 2024, as investors seek a safe-haven asset amid rising geopolitical tensions, monetary policy easing, and inflation fears.

According to the World Gold Council, the average price of gold in 2024 was $2,086.50 per ounce, up 13% from 2023 and the highest annual average ever recorded. The precious metal hit an all-time high of $2,135.40 on December 4, 2024, surpassing the previous peak reached in 2020.

The council attributed the strong performance of gold to three main factors: momentum-driven hedge funds, central banks continuing to buy physical gold, and renewed demand from exchange-traded fund (ETF) investors.

Hedge funds and other speculative traders have been chasing the upward trend of gold prices, betting on further gains and volatility.  According to a report by Mining.com, the council estimated that these investors accounted for about 40% of the total gold demand in 2024.

Central banks, especially those in emerging markets, have been diversifying their reserves and increasing their holdings of gold as a hedge against currency devaluation and geopolitical risks. However, the council reported that central banks bought 557 tonnes of gold in 2024, the second-highest annual total on record, after 2019.

ETF investors, who had reduced their exposure to gold in 2023, returned to the market in 2024, driven by concerns about inflation, low interest rates, and a weakening US dollar. Furthermore, the council said that global gold-backed ETFs saw net inflows of $18.3 billion in 2024, adding 326 tonnes to their holdings.

The council also noted that gold benefited from its role as a store of value and a hedge against uncertainty, as the world faced several challenges in 2024, such as the conflict in the Middle East, the elections in major economies, and the energy transition.

However, the council warned that gold could face some headwinds in 2024, such as a faster-than-expected recovery of the global economy, a tightening of monetary policy by the US Federal Reserve, and a decline in retail demand for gold jewelry and coins.

Despite these potential risks, the council remained optimistic about the outlook for gold in 2024, citing its long-term positive correlation with inflation, its diversification benefits for investors, and its growing demand from emerging markets.

Also, the council highlighted the opportunities for innovation and sustainability in the gold industry, such as the use of blockchain technology, the development of green mining practices, and the promotion of responsible sourcing and ethical standards.

As the world enters a new year, gold remains a valuable and resilient asset that can help investors navigate the complex and uncertain times ahead.