The World Gold Council (WGC) released a comprehensive array of data and analysis on Wednesday that provides insight into the evolution of the gold market over the past year, while also offering impactful predictions for trends in 2025.

Reflecting on 2024, the global gold market exhibited a remarkably thriving atmosphere

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The total demand for gold worldwide—including over-the-counter transactions—rose by 1%, reaching a record high of 4,974.5 tonsThis commendable achievement can be attributed to several driversPrimarily, the vigorous activity within the investment sphere has injected robust momentum into gold demandAmidst a backdrop of unpredictable global economic conditions and frequent risk events, investors redirected their focus towards gold, perceiving it as a safe haven amidst the chaosAdditionally, central banks accelerated their purchases during the last quarter of the previous year, which further fueled the demand for gold.

The performance of spot gold prices in 2024 was equally impressive, marking an annual rise of 27%, thereby recording the most significant increase since 2010. The Federal Reserve's adjustments in interest rates played a pivotal role in this growth, lowering the opportunity cost of holding gold and significantly bolstering its allure

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Simultaneously, an array of global risk scenarios, such as geopolitical tensions and escalated trade frictions, heightened market demand for hedgingInvestors flocked to the gold market, driven by the desire to preserve and enhance the value of their assets, propelling gold prices to new heights and surpassing the $2860 mark.

Central banks emerged as linchpins within the gold demand spectrumAccording to the WGC, central banks represented the primary source of demand, with purchases exceeding 1,000 tons for the third consecutive year in 2024. This noteworthy statistic underscores central banks’ affinity for goldAmong them, the National Bank of Poland particularly stood out as the largest gold buyer, augmenting its reserves by 90 tons

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This strategic move not only highlights Poland's valuation of gold as an asset but also influences the global supply-demand dynamics within the gold market significantly.

Quarterly analyses revealed that central bank purchases surged in the last quarter of 2024. The WGC estimated that, based on reported purchases and projections for unreported activity, central bank acquisitions in that quarter rose by 54% year-over-year, reaching a total of 333 tonsThis robust growth trajectory fortified the flourishing status of the gold market, providing a substantial underpinning to the escalation in gold prices.

Investment demand for gold also witnessed significant expansion in 2024, growing by 25% to hit 1,180 tons, the highest level in four years

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A critical factor contributing to this uptrend was the end of a four-year outflow from physically-backed gold exchange-traded funds (ETFs). As market conditions evolved and investor sentiment around the value of gold investments shifted, gold ETFs regained favor, attracting substantial capital inflow and, consequently, bolstering gold investment demand.

Furthermore, a notable transformation occurred regarding investors’ preferences for various gold productsInvestment demand for gold bars rose by 10%, which could be attributed to the high standardization, liquidity, and easier storage and trading attributes of barsIn contrast, coin purchases plummeted by 31%, possibly due to their collectible nature which, during periods dominated by risk aversion in the market, led investors to favor financial products with stronger fiscal attributes, such as gold bars.

Looking ahead to the year 2025, Louise Street, a senior market analyst at the WGC, provided definite forecasts

She stated, "We expect central banks to continue playing a dominant role in 2025, with gold ETF investors also coming into play, especially in a context of declining interest rates despite increasing volatilityGeopolitical strife and macroeconomic uncertainties are expected to be pivotal themes this year, supporting the demand for gold as a store of wealth and a risk mitigation tool." Given that the global economic landscape continues to unravel with uncertainties, and geopolitical tensions rise, the demand for gold as a safe haven is anticipated to increase furtherAs vital participants in the gold market, central banks' purchasing behaviors are set to exert significant influence on gold pricesLikewise, gold ETF investors are likely to adjust their strategies in response to market fluctuations, further affecting the supply-demand relationship of the gold market.

When excluding opaque over-the-counter transactions, the WGC indicated that last year, total gold demand experienced a slight increase of 1%, amounting to 4,553.7 tons, representing the highest level since 2022. However, demand in the over-the-counter sector saw a decline—estimated at 7%—primarily attributable to profit-taking behavior from high-net-worth investors as they capitalized on the soaring gold prices.

In terms of physical demand, consumer gold jewelry remains the largest segment

Yet, in 2024, gold jewelry consumption diminished by 11%. This decline can largely be ascribed to the rising gold prices, which dramatically increased the cost for consumers seeking to purchase gold jewelry, thereby suppressing overall demandConcurrently, mining output remained stable while recycling levels surged by 15%. With escalating gold prices, the margins for recycling gold widened, enticing more recyclers into this segment and consequently promoting growth in recycled gold volumes.

The WGC anticipates that this year, jewelry demand will remain subdued due to elevated pricesFaced with exorbitant gold prices, consumers may shrink their purchases of gold ornaments in favor of alternative optionsRecycling levels, however, are expected to increase further, as technological advancements and enhanced recycling channels will continuously improve the efficiency of gold recovery, thus amplifying profit margins and drawing more resources into the gold recycling sector.

In summary, the global gold market achieved remarkable progress in 2024, powered by increased investments and proactive purchases by central banks