Central banks, geopolitical risks push gold prices 15% higher in 2023: Report

Ahram Online , Thursday 11 Jan 2024

Gold prices surged 15 percent year-on-year (YoY) to $2,078 per ounce in 2023, its all-time-high, supported by the increased demand by central banks and the geopolitical risks that benefit a haven like gold, according to a report by the World Gold Council (WGC).

File Photo: Gold bars. AFP
File Photo: Gold bars. AFP


The report estimates the central banks' contribution to global gold demand between 10 and 15 percent, while geopolitical risks are estimated to add 5 percent to the increase in demand.

Another factor that contributed to the outstanding performance of gold is the fluctuation of bond yields, which constitute an alternative investment option, the report said.

Gold outlook 2024

The WGC expressed optimism regarding the yellow metal's performance in 2024, as the easing monetary policy promised by the Federal Reserves could result in a hard landing in the market that could mean that either inflation figures would still be high or a recession risk looms.

“Gold was a surprising star in 2023, surging against the odds of rapidly rising interest rates and resilient economies. Central banks are largely to be thanked for the outperformance. Yet elevated geopolitical risks likely caused reticence among investors to give up gold and was a key driver of central bank demand,” the council said.

On Thursday, the gold spot price reached $2,033.65 per ounce, according to Bloomberg.

The WGC released a report in May indicating that 24 percent of central banks worldwide intend to increase their gold reserves within the next year, driven by growing pessimism towards the US dollar.

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