Gold experienced a major bullish surge in 2023, with the price of gold reaching record highs. This surge can be attributed to various factors, including its status as a safe-haven asset during moments of global uncertainty and volatility. Central banks, particularly those in emerging markets, played a significant role in driving demand for gold, with many increasing their gold reserves as a way to diversify away from the US dollar and US dollar assets. These moves were in response to geopolitical risks, such as potential asset seizures following the conflict in Ukraine in 2022. The desire to hedge against potential economic downturns and ongoing geopolitical risks also contributed to gold’s continued strong performance in 2023.
At the same time, gold exchange-traded funds (ETFs) experienced net outflows across the world for the third consecutive year, with Europe and North America seeing significant contractions. However, Asia reported modest net inflows, driven by geopolitical tensions and local economic uncertainties.
Moving into 2024, there is a consensus among leading analysts that gold’s rally has not yet concluded, as central banks are expected to continue purchasing gold at a steady pace. Furthermore, the potential for a significant drop in real yields, driven by likely interest-rate cuts, should drive gold prices even higher. Traders are also demonstrating a strong net long positioning on COMEX, reinforcing expectations for higher gold prices.
Therefore, it seems that gold will continue to be a key asset in investors’ portfolios in 2024, especially if the global economy faces recessionary pressures and geopolitical risks persist. The potential for further growth in gold prices indicates that it remains a valuable option for investors looking for safe-haven assets in uncertain times.
