Global Gold Demand Hits an All-time High of $2,100 Per Ounce Amid the War in Ukraine and Israel

Demand for gold worldwide reached a historic peak of $2,100 per ounce at the end of 2023 amidst the conflicts in Ukraine and Israel, as reported by CNBC citing the World Gold Council.

Gold prices reached a record high of $2,100 per ounce in December 2023, driven by active buying from central banks and retail investors. The total volume of gold transactions in 2023 reached a record 4,899 tonnes, compared to 4,741 tonnes in 2022, according to the World Gold Council.

This demand arose against the backdrop of geopolitical tensions and economic decline in China in 2023, as investors actively sought a safe haven for their funds, traditionally found in gold. All these factors led to a record increase in demand for this precious metal last year.

The leader in gold purchases last year was the People's Bank of China, which acquired 225 tonnes of gold, increasing its reserves to 2,235 tonnes. Data from the World Gold Council also indicates that in 2023, China surpassed India as the world's largest buyer of gold jewellery.

"Chinese investors are concerned about the future of other asset classes, and they turn to gold as a way to protect their investment portfolios. In fact, gold has performed very well in yuan and compares favourably with other asset classes in China," explained Shaokai Fan, head of central banks at the World Gold Council.

Primarily, the demand for gold in 2023 was driven by the Russian-Ukrainian war, the Hamas attack on Israel, the military operation by Israelis in the Gaza Strip, the slowing economic growth in China, and the real estate crisis in the country. Experts predict that these factors will continue to impact the rise in gold prices even in 2024.

As for forecasts for 2024, analysts indicate that gold purchases this year are unlikely to reach the levels of 2023. However, they note that a decrease in inflation in the United States and other factors could cause fluctuations in either direction.

"If inflation significantly decreases, consumers will feel wealthier in real terms, which could reduce the decline in demand for gold in 2024," said the World Gold Council.

The expected decline in the value of the US dollar and interest rates in 2024 is considered by analysts as a key positive factor for the precious metal. In particular, they anticipate that as a result, gold prices could reach $2,200 per ounce by the end of 2024.