Sign in Subscribe
Gold

Gold Price Surges to Record High, Driven by Increased Demand from ETFs and Emerging Markets

Strategic Insights

— 2 min read

As the global economy grapples with unprecedented uncertainty, the price of gold has surged to a record high, surpassing $4,100 an ounce for the first time. The extraordinary rally has seen gold prices increase by nearly 100 percent since the start of 2024, with the speed of the upswing catching analysts off guard. The soaring price of gold has sparked intense demand, with long lines of investors forming outside gold dealers in Sydney and beyond.

Key Takeaways:

  • The price of gold has surged to a record high, surpassing $4,100 an ounce, driven by increased demand from gold exchange-traded funds (ETFs) and emerging markets.
  • Gold ETFs have made commodities such as gold more accessible to investors, changing their view of gold's traditional role as a safe-haven asset.
  • Emerging market economies, including China and Russia, are switching their official reserve assets out of currencies such as the US dollar and into gold, with central bank holdings of physical gold rising 161 percent since 2006.
  • Russia has become a net buyer of gold since 2006, with its gold purchases accelerating following its annexation of Crimea in 2014.
  • China has been selling down its holdings of US government bonds and switching to buying gold, a process referred to as 'de-dollarisation'.
  • Emerging market central banks lifted their gold holdings after Russia's exclusion from the international payments system SWIFT and a proposal to seize Russian central bank reserves to help fund support for Ukraine.
  • Ongoing demand from Russia and China, and investor demand for gold ETFs, means the gold price could rally further, with analysts at Goldman Sachs revising up their price target to $4,900 an ounce by the end of 2026.
  • The current gold rally will benefit Australia, the world's third-largest producer of gold, with the value of gold exports expected to overtake liquefied natural gas exports next year.

Statistics:

  • Gold prices have increased by nearly 100 percent since the start of 2024.
  • Central bank holdings of physical gold in emerging markets have risen 161 percent since 2006 to be around 10,300 tonnes.
  • Emerging market gold holdings grew by only 50 percent over the 50 years to 2005.
  • Russia became a net buyer of gold in 2006 and accelerated its gold purchases after its annexation of Crimea in 2014.
  • China has been selling down its holdings of US government bonds and switching to buying gold, a process referred to as 'de-dollarisation'.
  • The World Gold Council reported record monthly inflows in September, with ETF inflows topping $26 billion for the September quarter and $64 billion for the nine months to September.
  • Analysts at Goldman Sachs have revised up their price target for gold to $4,900 an ounce by the end of 2026.

Sources:

  • "Gold surges to record high of $4,100 an ounce" by Reuters
  • "CBK scouts vaults for gold as it moves to diversify reserves" by Business Daily
  • "Gold ETFs are fuelling gold's price surge" by Financial Times
  • "Russia's central bank expands gold reserves after SWIFT exclusion" by Bloomberg
  • "China's gold reserves surge as central bank diversifies assets" by Nikkei Asia
  • "World Gold Council reports record monthly inflows" by World Gold Council
  • "Gold price set to surge to $4,900 an ounce, says Goldman Sachs" by Evening Standard

Read more