Record Gold Demand Expected to Surge in 2024 Amid Federal Reserve’s Rate Cut Plans

Amidst anticipation of a Federal Reserve rate cut, the global demand for gold is expected to surge in 2024, according to projections from the World Gold Council (WGC).

Last year, total gold demand rose by approximately 3% to 4,899 tons, representing the highest figure recorded since 2010.

This surge was fueled by robust demand in the over-the-counter market and sustained buying by central banks, reflecting the metal’s appeal as a hedge against economic uncertainty and geopolitical tensions.

Joseph Cavatoni, the WGC’s chief market strategist, highlighted the favorable landscape for emerging central banks to continue increasing their gold reserves.

Notably, countries like China and Poland are expected to lead the charge in record buying, contributing to the overall surge in demand.

The comprehensive gold demand encompasses various sectors, including investment, jewelry, coins, central bank acquisitions, exchange-traded funds (ETFs), and over-the-counter transactions.

The over-the-counter market, in particular, witnessed exponential growth in 2023 with demand soaring by 753%, the highest since 2011.

Investors, including sovereign funds and hedge funds, sought refuge in gold bars amidst economic and political uncertainties.

Central banks maintained a brisk pace of acquisitions, with net purchases totaling 1,037 tons in 2023, just shy of the record set in the previous year.

The WGC forecasts central bank purchases to exceed 500 tons in 2024, underlining the sustained interest in gold as a strategic asset.

As the Federal Reserve signals a potential shift towards rate cuts, investors are likely to further bolster their gold holdings, seeking refuge from lower Treasury yields and a weaker dollar.

With expectations of increased demand in the coming year, gold prices may witness significant upside potential, potentially surpassing $2,200 per ounce.