## Gold Price Surges to Record Highs in 2024
The gold price has continued to rise in 2024, reaching record highs due to strong central bank buying and a tense geopolitical situation. Metals Focus, an independent precious metals consultancy, forecasts that gold will average US$2,250 per ounce this year, a 16 percent increase from the previous year and a new record for the precious metal.
### Factors Driving Gold Prices
Despite facing traditional headwinds such as a strong US dollar and a lack of interest rate cuts from the US Federal Reserve, gold has seen significant gains in 2024. One of the key drivers of this momentum is the looming debt in the US, combined with the forthcoming election. Both presidential candidates are expected to continue deficit spending, prompting investors to seek a safe haven in gold.
On a global scale, uncertainties surrounding the Chinese economy have also contributed to increased investor interest in gold. Additionally, continued central bank buying, led by countries like Turkey, China, and India, has provided additional support to gold prices.
### Geopolitical Considerations
Geopolitical tensions have played a significant role in the strength of gold in 2024. While conflicts typically have a temporary impact on gold prices, the potential development of a deeper regional conflict in the Middle East could have implications on oil supply and trade routes, influencing investor sentiment.
Despite expectations of near-term corrections as investors capitalize on profits, Metals Focus believes that the downside should be limited. Moreover, as sidelined investors seek opportunities to enter the market, the overall trajectory for gold remains positive.
## Supply and Demand Imbalance for Gold in 2024
Metals Focus anticipates a slight imbalance in supply and demand for gold in 2024. Following a surplus of 212 MT in the previous year, the firm expects this surplus to double. This imbalance is driven by a 3 percent increase in mine supply, with most regions experiencing growth except Oceania and Europe.
For instance, Ghana is expected to see significant production growth from mines like Newmont’s Ahafo mine and AngloGold Ashanti’s Obuasi mine. Furthermore, the launch of Shandong Gold Mining’s Namidini mine in the fourth quarter of 2024 is projected to contribute to the supply increase.
In terms of demand, a 2 percent decline in jewelry fabrication is forecasted for 2024, primarily due to higher gold prices and economic uncertainty. However, gains in the Indian market may offset some of these losses, as the economy remains robust and consumers continue to purchase gold despite price increases.
While physical investment in gold is expected to decrease, particularly in the US and Europe, central bank purchases are forecasted to remain high throughout 2024. This continued buying activity, along with supply and demand dynamics, is likely to shape the gold market in the coming months.
