2024 Mystery: Who Drove the Surge in Gold Prices?

Since the beginning of 2024, gold prices have surged, reaching a historic high of $2,800 per ounce in October.

Traditional views hold that geopolitical tensions or economic uncertainties are the main drivers of rising gold prices, but Bloomberg's mini-documentary released on the 6th, "Who is Behind the Crazy Rise of Gold?", reveals that this year's gold surge is also driven by a "mysterious Eastern force."

Analysts believe that the real driver of the gold market in 2024 is China's "gold rush." Central bank data shows that from 2023 to April this year, the People's Bank of China has increased its gold reserves for 18 consecutive months. As of the end of October 2024, China's central bank gold reserves stood at 72.8 million ounces (approximately 2,264.33 tons). Additionally, in the face of global economic uncertainty, Chinese consumers have sparked a buying frenzy for gold jewelry and bullion as a means of hedging and preserving value.

It is noteworthy that by the fall of 2024, this frenzy began to cool, with sales in China's gold market declining in October, and gold prices also turning downward. According to insiders quoted by Bloomberg, areas that previously sold 20-40 tons of gold in a month sold only 1 ton in October.

Central Bank Accumulation and Public Gold Purchases, China's Gold Market Booms

The safe-haven property of gold makes it the preferred investment tool for central banks around the world, especially against the backdrop of global economic uncertainty.

Bloomberg analyst Sybilla Gross stated that since 2022, emerging market countries have begun to question their reliance on dollar reserves. Central bank data shows that from 2023 to April this year, the People's Bank of China has increased its gold reserves for 18 consecutive months. As of the end of October 2024, China's central bank gold reserves stood at 72.8 million ounces (approximately 2,264.33 tons).

Analysts believe that this "de-dollarization" movement has made central banks one of the main drivers of rising gold prices. Bloomberg data indicates that the total gold reserves of central banks worldwide have reached 2,300 tons, with China holding a significant share.

The documentary mentions that beyond the central bank's gold-buying frenzy, Chinese consumers have also injected strong momentum into the gold market in 2024. Amid uncertainties in the international economic situation, gold has gradually become a safe haven for many families. In 2023, China became the world's largest retail gold market, with total consumption reaching 1,000 tons.

Not only ordinary consumers, but Chinese wealthy individuals are also hoarding gold, especially physical gold bars.

Geopolitical and Economic Uncertainty Driving Forces

The documentary points out that geopolitical risks are also an important driver of the surge in gold prices in 2024. The Russia-Ukraine conflict, the situation in the Middle East, and expectations of interest rate cuts in the United States have collectively catalyzed the rise of the gold market Gross believes that in the future, there will still be threats from Trump's tariffs, and market risk aversion is rising.

Although China's gold demand fell in October, the demand for physical gold bars among the wealthy remains strong. Bloomberg data shows that sales of gold bars and coins are expected to increase by nearly 30% year-on-year in 2024. Gross believes that this trend is driven by increasing anxiety globally.

Amid uncertainty about the future economy, gold, as the safest form of wealth storage, has its value further amplified.

Risk Warning and Disclaimer

The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at their own risk