Gold prices surged to unprecedented levels in 2024, having first entered the year at US$2,041.20 per ounce coming off previous highs from December 2023.
Since then, the price of gold has settled at $2,323.60 as of June 27, but it’s been nothing short of a roller-coaster year for the yellow metal as we settle into the halfway mark of the year.
An overview of gold prices in 2024
Over the first few months of the year, the gold price continued its upward trend and reached a year-to-date high of $2,430.58 per ounce in mid-April.
Fueling the increase, at the time, was investors flocking to gold in anticipation of interest rate cuts expected later this year, according to ABC News. As such, this led to an uptick in momentum trading.
By May, the gold price surged even higher to an all-time high of more than $2,450 per ounce fuelled by continued expectations of U.S. rate cuts as the Bank of Canada and the European Central Bank made their own rate cuts, in addition to a stronger U.S. dollar.
As of June, however, the Fed revealed rates would remain steady. It did indicate rates could be cut only once more in 2024 instead of the three times that many prognosticators had forecast it would do.
World gold demand soars and supply rises
Demand for the yellow metal, excluding OTC demand, in the first quarter Q1 slipped by 5 per cent year-over-year, according to the World Gold Council, to 1,102 tons because of continued exchange-traded fund (ETF) outflows.
Sizable OTC buying by investors, however, increased total gold demand by 3 per cent year-over-year to 1,238 tons, which is the strongest first quarter since 2016. Bar and coin demand stayed on par with the previous quarter at 312 tons, also representing a 3 per cent increase year-over-year.
In terms of gold demand from central banks, the World Gold Council reported that demand from central banks totalled 290 tons in the first quarter, which is the strongest start to any year ever recorded. Leading the charge were countries such as China, Turkey and India and are indicative that demand from central banks will remain strong throughout the rest of the year.
Gold buying from central banks also fuelled an increase in gold prices. Additionally, the World Gold Council further claims that official global gold reserves rose by 290 tons, the highest Q1 dating back to 2000 and 1 per cent higher than the Q1 record set in 2023 (286 tons).
That being said, gold purchases by the People’s Bank of China were put on pause in May after 18 months of net inflows.
In India, where gold demand is fuelled by its culture and financial value, demand for the yellow metal dimmed after the Akshaya Tritiya festival in May, which is a day dedicated for gold purchases. The World Gold Council stated that strong buying exceeded expectations, which included gold purchases and jewelry, but quickly died down.
Meanwhile gold supply increased by 4 per cent year-over-year in Q1 2024 largely resulting from strong mine production at 893 tons, representing an all-time high, according to the World Gold Council.
Notably, supply rose in the following countries:
- Canada, thanks to the Meadowbank and Magino Mines, which are estimated to have driven up production by 16 per cent year-over-year
- Production in Ghana rose 15 per cent year-over-year because of the recovery in production at the Ahafo mine.
- Mine production In China was up 5 per cent year-over-year thanks to growth in mines from key provinces such as Shandong and Henan early in the quarter; lower grade operations are expected to expand because of the high gold price.
ETFs reign supreme
ETFs were back on the rise in May, according to the World Gold Council, particularly in regions such as Europe and Asia while North America experienced slight losses.
It’s estimated that by the end of May, ETFs all around the world had 3,088 tons divided across their gold ETF holdings.
Q3 2024 and beyond
As we settle into the third quarter of the year and look into the rest of 2024, gold prices are projected to remain above the $2,000 per ounce threshold for some time.
Case in point, firms such asJP Morgan Chase & Co. project that gold will average to $2,175 per ounce by the fourth quarter, up from around $1,915 in Q2 2023.
Overall, the World Bank estimates the average price of gold throughout the year will hover around the $2,100 mark based on conflicts in the Middle East.
With the U.S. election coming in Q4 this year, it will be interesting to see how that also impacts the price of gold in the last months of the year.
In terms of reservoirs, mine supply is expected to top that of 2018, with expected growth coming from countries such as Canada, China and Ghana.
Meanwhile, according to data from Statista, gold production is projected to reach more than 124 million ounces this year, which is up from 116 million ounces in 2021.
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