KEY TAKEWAYS

• Gold has been one of the best-performing global assets of 2024, with central banks propelling much of the demand. 
• Global official gold reserves increased by 290 metric tons in the first quarter of the year, the largest first-quarter increase since at least 2000, according to the World Gold Council.
• More North American professional investors reported higher gold allocations in 2023 than in the years right before the pandemic.
• The World Gold Council called gold “a market in search of a catalyst” in its midyear outlook.

Gold has been one of the best-performing global assets of 2024, with central banks driving significant demand. 

Central banks, led by those in China, Turkey, and India, added more than 1,000 metric tons of gold in both 2022 and 2023, according to World Gold Council’s 2024 Central Bank Gold Reserves report published in June, and they haven’t slowed down so far this year.

Global official gold reserves increased by 290 metric tons in the first quarter of this year, the largest first-quarter increase since at least 2000 and 69% higher than the five-year quarterly average, according to the World Gold Council.

In May, central banks reported buying 10 metric tons of gold, according to the International Monetary Fund (IMF) and other sources. What’s more, the 2024 Central Bank Gold Reserves Survey, conducted between February and April, found that 29% of central bank respondents planned to increase their gold reserves over the next 12 months.

This plan is driven by “a desire to rebalance to a more preferred strategic level of gold holdings, domestic gold production, and financial market concerns including higher crisis risks and rising inflation,” according to the council.

North American Professional Investors Raise Allocation

Beyond central banks, North American professional investors also have upped their gold holdings and reaped rewards from higher prices. A survey of 525 such investors, in a separate World Gold Council report from late June, found that 85% reported an allocation to some type of gold investment in 2023, compared with 69% in 2018 and 76% in 2019. The report didn’t include data for 2020 to 2022.

These professional investors “view gold as an excellent portfolio diversifier and inflation hedge, and agree that it reduces portfolio risk,” the council said. 

Outlook for Gold in Second Half

The spot price of gold has increased 12.7% year-to-date in 2024, ranking it among the top-performing assets. As of Tuesday at 2 p.m. ET, the price of gold was roughly $2,324, about 5% below its all-time high set in May.

The World Gold Council said in its midyear report released Tuesday that it believes that the current price “broadly reflects consensus expectations for the second half of the year,” but noted a case for the metal to outperform.

“The global economy, as well as gold, seem to be waiting for a catalyst,” the council said. “For gold, we believe the catalyst could come from falling rates in developed markets, that attract Western investment flows, as well as continued support from global investors looking to hedge bubbling risks amid a complacent equity market and persistent geopolitical tensions.”