Global demand for gold reached a record high in 2023 and is expected to rise this year as the US Federal Reserve (Fed) cuts interest rates, potentially supporting prices, Bloomberg reported, citing Agerpres.

The latest report released by the World Gold Council (WGC) shows that total global “consumption” of gold rose by around 3% to 4,899 tonnes last year, thanks to solid demand from external regulated markets as well as massive purchases by central banks. . This is the highest level since the data were published in 2010.

“We expect central banks in developing countries to continue to be net buyers. We anticipate record purchases in countries such as Poland and China,” explained Joseph Cavatoni, an analyst at WGC.

High demand data includes investment bullion, jewelry, coins, central bank purchases, exchange-traded funds, and over-the-counter (OTC) market activity. Participants in this over-the-counter market include sovereign wealth funds, high net worth funds and hedge funds that invest in gold, Cavatoni said.

The price of an ounce of gold rose 13% last year, hitting a record high in early December, amid economic and political uncertainty, geopolitical tensions and expectations that the US Federal Reserve (Fed) is set to cut interest rates.

Significant growth in demand for gold

In the over-the-counter (OTC) market, annual demand growth reached 753% in 2023, the highest level since 2011, according to WGC data. “We expect investors to continue to accumulate gold at an accelerated pace this year,” Cavatoni said.

He expects the price of an ounce of gold to reach or exceed $2,200. The precious metal rose to a peak of $2,135.39 an ounce on Dec. 4, surpassing the previous all-time high reached in 2020 during the pandemic.

Central banks continued to buy gold heavily, with annual net purchases reaching 1,037 tonnes last year, just 45 tonnes below the record level set in 2022. The WGC expects central bank gold purchases to top 500 tonnes this year.

Purchases of gold for jewelry manufacturing may decline this year due to a slowing economy and high prices, after last year’s consumption in the segment was 2,093 tonnes.

India, the world’s second-largest consumer, could be an exception as demand from the Asian country is expected to recover to 800-900 tonnes in the next two years after falling to 748 tonnes in 2023. The recovery is supported by rising incomes amid a growing economy, said PR Somasundaram, regional director of WGC India.

In China, demand for gold for jewelry is likely to remain stable amid a depreciating currency and growing economic uncertainty.