Gold has proven its enduring appeal, recording an extraordinary performance that has captivated investors. In 2024, the precious metal achieved a historic +25% annual return, even as the dollar index surged by +5%. This exceptional trend underscores the resilience and allure of gold in challenging market conditions.
Gold’s impressive performance stands out even more when viewed alongside declining retail interest and negative net ETF flows last year. Yet, the market witnessed robust price action, fuelled by a new and powerful source of demand. Central banks have emerged as pivotal players, driving record-breaking gold purchases since late 2022.
The catalyst for this trend can be traced back to early 2022, when the United States froze Russia’s foreign exchange reserves, igniting global concerns about the security of dollar-denominated assets. This prompted central banks across the globe to diversify their holdings, leading to unprecedented levels of gold buying. Since 2022, Poland, Turkey, and India have been among the leading purchasers. By the end of 2022, central banks had added a record 1,082 tonnes of gold to their reserves. This trend continued with 1,049 tonnes bought in 2023 and a further 684 tonnes purchased in just the first three quarters of 2024, according to the World Gold Council.
This robust demand underscores gold’s enduring role as a hedge against economic uncertainty and geopolitical risks. With central banks now a driving force in the market, the yellow metal remains a shining example of resilience and stability for investors.
Gold continues to solidify its position as a trusted store of value, benefiting from its dual role as a hedge and an asset of last resort.
TEAM plc (LON:TEAM) is building a new wealth, asset management and complementary financial services group. With a focus on the UK, Crown Dependencies and International Finance Centres, the strategy is to build local businesses of scale around TEAM’s core skill of providing investment management services.
