Gold is hitting new price records, exceeding the level of $2900 per ounce, and some banks, like Citi, are predicting the barrier of $3000 USD/oz to be reached within the next three months. The precious metal is also reaching unprecedented levels in Polish Zloty. The current ATH in Polish currency grazes 12 000 PLN/oz.
A new week brings a new all-time high! On Monday, February 10th, gold soared above the $2900 per ounce mark, with the current price record set (based on Stooq data at 1 PM) at $2906.95 USD/oz.
The situation is similar when it comes to the exchange rate of the royal metal expressed in Polish Zlotys. The newly established ATH in the domestic currency, marked also on Monday, February 10th, sits at 11792 PLN/oz.
What is driving the rising prices of precious metal?
Several key factors currently influence the rising prices of the precious metal, mainly the uncertainty and turmoil in the financial markets tied to the policy of the new administration in the United States. Issues related to trade wars are particularly relevant here.
The metal’s exchange rate is also driven by the flow of gold from London to the US sparked by fear of potential tariff hikes announced by Donald Trump, as well as due to global geopolitical tensions and the economic situation worldwide.
For this reason, Citi Research has already raised its price forecasts for gold. The new three-month prediction sits at $3000 per ounce (increasing from $2800 USD), and the average forecast for 2025 has been raised to $2900 USD/oz.
The bank emphasizes that geopolitical tensions and trade wars contribute to the growing diversification of foreign reserves, prompting central banks to increase gold purchases at the expense of the US dollar.
Moreover, the introduction of an additional 10% of tariffs on Chinese goods by the U.S. President, Donald Trump, and China’s response in the form of tariffs on American products deepened the global economic uncertainty.
Central banks bought over 1000 tons of gold again…
According to the World Gold Council, which just published its annual report, global demand for gold in 2024 reached a record historical level of 4974 tons. The main drivers of growth were central banks, which in 2024 purchased over 1000 tons of gold for the third year in a row. Just in the fourth quarter, these purchases amounted to 333 tons.
Over the course of last year, central banks, which have been net buyers of gold for 15 years, added 1045 tons to the global reserves of the precious metal. Bankers view gold as a stable strategic asset in the face of geopolitical and economic uncertainty, and predictions point out that purchases will continue in 2025.
Meanwhile, gold investments reached a four-year high of 1180 tons (+25% YOY), mainly due to the stabilization of the ETF funds after three years of outflows. Demand for bars and coins was similar to 2023 (1186 tons), but the structure shifted – the sale of bars increased, but the demand for coins decreased.
Demand for gold in the technology sector increased by 7%, driven by the development of artificial intelligence. The jewelry sector, on the other hand, noted a decrease in consumption by 11% (to 1877 tons), although the value of jewelry expenditures increased by 9% ($144 billion). Consumers bought smaller amounts, but at higher unit prices.
…and the leader is the National Bank of Poland!
In 2024, the National Bank of Poland was the largest buyer of gold among central banks, adding 90 tons to its reserves. The President of the National Bank of Poland, Adam Glapiński, openly talks about increasing the gold reserves to 20% of the total reserves. At the end of last year, the reserves of the domestic bank amounted to 448 tons, constituting 17% of the total foreign reserves.
Significant buyers from our region would also be the Czech Republic (+20 tons), Hungary (+16 tons), Serbia (+8 tons), and Georgia (+7 tons). Other countries leading in purchases include Turkey, which increased its official gold reserves by 75 tons, India (the Reserve Bank of India purchased 73 tons of gold in 2024), and China – the People’s Bank of China bought 44 tons of the precious metal.
The sale of gold by central banks in 2024 was tactical and modest compared to purchases. The Central Bank of the Philippines sold 30 tons of gold in response to the price increase, and the National Bank of Kazakhstan sold a net 10 tons of the precious metal. The Bank of Thailand noted that the reduction of gold in their reserves did not result from any sale.
Other significant net sellers in the year included the Monetary Authority of Singapore (-10 tons), the Central Bank of Curaçao and Sint Maarten (-4 tons), the Bundesbank (-1 ton, likely in connection with the coin minting program), and the Central Bank of the Republic of Cape Verde (-1 ton).
Russians protect their savings in gold
Data from the WGC also shows that gold enjoys record popularity among Russian consumers, who bought 75.6 tons of gold in the form of bars, coins, and jewelry in 2024 to protect their savings in the face of sanctions. This volume constitutes the fifth largest result globally and simultaneously makes up about one-fourth of the annual production of gold in Russia.
Purchases of gold by Russians increased by 6% compared to the previous year and by more than 60% since the country’s invasion of Ukraine almost three years ago. Russians started looking for alternative ways to secure their savings then, instead of traditional investments in dollars or euros.
Western sanctions last year intensified difficulties in cross-border payments and led to shortages of foreign currencies, with the ruble also falling to a historically low level. To stimulate gold sales, Russia abolished the VAT on retail purchases of the royal metal just after the invasion.
Russia is the second-largest producer of gold globally, extracting more than 300 tons of the metal each year. Since the invasion of Ukraine, Western countries have avoided Russian precious metal, which has halted the inflow of gold to trading centers like London and New York.
The Central Bank of Russia, once the biggest buyer of gold globally, also did not resume purchases in large quantities.
Michał Tekliński, Gold Market Expert at Goldsaver.pl, Goldenmark Group
Source: https://ceo.com.pl/zloto-zamiast-dolara-banki-centralne-zmieniaja-strukture-rezerw-55672
