Last week, the World Gold Council published a quarterly report that closes the balance for the entire year of 2024. The report not only illustrates the situation in the gold market but also points out some significant trends that could shape the market in the coming years. According to data, supply last year amounted to 4974.5 tons, an increase of just 1% compared to 2023, while supply from gold recycling recorded an impressive 11% increase (up to 1370 tons)! This is a crucial issue, especially in the context of the rising prices of this precious metal. Could the rise in gold prices make mining and gold recovery increasingly profitable? Tavex expert shared his comments.
40 new records for gold and dynamic growth
In 2024, gold achieved 40 new price records. The average price in the fourth quarter was $2,663/oz, which translated into an average annual price of $2,386/oz (+23% YoY). In addition, as in previous years, the market was perfectly balanced, most likely due to skillful balancing of the OTC position, i.e., gold demand generated by OTC instruments. The total demand and supply only increased by 1% compared to 2023, but mining amounted to 3661 tons (only 17 tons higher YoY). This demonstrates that the rising prices of the precious metal over the past year have increased the profitability of gold recycling, and the recovery of the metal is even more profitable.
While the rising gold prices are good news that may cheer those involved in the mining and recycling industry, it may not necessarily cheer jewelers. For this group, the ever-rising prices of gold could undoubtedly become quite a challenge. According to data, 2024 brought a 9% drop in gold demand from this sector, reaching 2003.5 tons. However, the value of jewelry purchased increased by 9%, which is up to $144 billion, due to record gold prices.
The situation in the technology sector looks optimistic, where demand for gold increased by 7% and was dominated by the electronics sector, probably due to the growing role of artificial intelligence. In the production of such devices, another precious metal – silver, which is a key material used in technology development, plays an extremely important role, so we will probably observe increases in the usefulness of this precious metal over the years.
Central banks increase purchases
Although demand from central banks, which was 1044.6 tons, was only 1% lower than in 2023, it is worth noting that the central banks increased their gold purchases over the past three years, which is a significant trend in the context of long-term monetary policy.
The increasing demand from central banks signals that gold is still seen as a stable form of securing reserves in times of global uncertainty. Among the countries that increased gold purchases in 2024, Poland stands out, purchasing as much as 90 tons of gold. This makes the National Bank of Poland the largest buyer of gold last year – total gold reserves of Poland reached 448 tons at the end of the year, which represented 17% of the country’s total currency reserves. Openly, the aim is to reach a 20% share of gold in NBP reserves.
The data for 2024 clearly shows that gold continues to serve as a hedge against inflation and market volatility. The dynamics of demand, especially in the investment and central banks sector, may indicate an increase in interest in gold in the coming years. Given the stability of supply and the growing role of gold in technology, 2024 may prove to be the beginning of a new stage in the precious metals market.
Source: https://ceo.com.pl/banki-centralne-kupuja-zloto-polska-liderem-w-regionie-34745
