Gold shines amid geopolitical uncertainties

Gold prices reached an all-time nominal high of $2,331 per troy ounce in April. The surge builds on a 7 percent increase in the first quarter of 2024 (q/q), continuing a period of elevated prices that began in 2020. Recent price increases have been supported by strong demand from several EMDE central banks and increased activity in exchange-traded funds (ETFs) in China, amid heightened geopolitical uncertainty. As a safe-haven asset, gold often increases in price during periods of elevated geopolitical tensions and policy uncertainty. Record central bank buying—led by China, India, and Türkiye—bolstered gold demand in the first quarter of 2024. Notable, China’s central bank extended its gold purchases for the 17th consecutive month in March 2024, setting a record for the longest reported streak of monthly purchases. In contrast, demand from the jewelry, technology, and investment sectors remained subdued in 2024Q1. Gold prices are expected to be 8 percent higher in 2024 compared to 2023, supported by continued robust demand from EMDE central banks, retail investment (where gold jewelry serves as a quasi-investment in some countries), and strong safe-haven demand.

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