Over the past year, the price of gold has consistently set new records. 2024 began with the highest price in history, at 2,050 dollars per ounce, and every month since established a new high. Markets have shown continued interest in investing in the precious metal, which has led to a steady rise in the price from March to the present. The current price on world markets is around 2,660 dollars per ounce, an increase of more than 28% in almost nine months. Statistics predict the year will end with a new record high.
“Gold has been registering a steady long-term price growth for almost three years and is considered a safe investment. Global demand of gold for the second quarter of this year was 1.258 tones, an increase of four percent compared to last year. Moreover, the World Gold Council announced that this was the second strongest quarter since they began keeping track in 2000. Also, the purchases made by the central banks were up six percent compared to last year, which was a record year. Therefore, we can clearly observe that gold demand is at a historic high,” says Victor Dima, the Manager of the Treasury Department at Tavex Romania.
Central banks across the world categorize gold as a stable resource, which is entirely under their control and not depended on external factors, and this model is being adopted by a growing number of private investors. Among them is the National Bank of Poland, which sees gold as a long-term shield against inflation and a stable reserve, currently holding a record 391.7 tons of the metal in its treasury.
On the other hand, the National Bank of Romania has not increased its gold holdings since October 2002, when it purchased about 20 kilograms of gold. The institution said that the decision not to buy gold is due to the high percentage of gold holdings in the bank’s international reserves. Currently, the 103.6 tons of gold held by the NBR represents 10.5% of the total reserves held by the central bank.
China – the world’s biggest gold market
Analysts say that investment gold demand in America and Europe is stable. In the USA, the total demand of physical gold peaked in 2021 and currently stands at around 250 tones. A similar situation is seen is Western Europe. Investment gold `shines` the brightest in Eastern markets – mainly China, India, and Turkey. According to the data of the World Gold Council, the purchase of investment gold has reached a new high in the Middle East, and their demand is one of the key factors pushing the gold price up.
“China is the largest gold market in the world in terms of the amount of gold it produces, as well as the amount of gold it consumes and is estimated that each year it imports 1,300 tons of gold in the form of investment gold and gold for jewelry. Investment gold in China is considered one of the safest and most responsible purchases. The demand for investment gold in the first half of this year has increased by 65% compared to the previous year, an absolutely astounding increase in a single year,” adds Victor Dima.
Since 2015, the Central Bank of China raised its reserves from around 1050 tons to 2,264 tons and is ranked sixth in the world in gold reserves, but if it continues with such purchases, it could overtake the top spots held mainly by Western countries. The United States is on the first place with 8,133 tons of gold reserves. Next come Germany with 3,352 tons, Italy – 2,452 tons, France – 2,437 tons, Russia – 2,336 tons.
The very next positions are held by Hungary (95 tons), Serbia (42 tons), Bulgaria (41 tons), Cyprus (14 tons), North Macedonia (7 tons), Albania (3.4 tons), Slovenia (3.2 tons) and Bosnia and Herzegovina (1.5 tons). Croatia, Montenegro and the Republic of Moldova have no gold holdings in international reserves.
In Romania, the value of the most frequent transactions is between 1,000 and 2,000 euros, with some clients allocating as much as 50,000 euros and even 100,000 euros for gold. A good sign is that these values increase every year, as does the number of clients.
Gold protects reserves from external factors
According to a survey by Invesco American found, 96% of worldwide central banks consider gold a safe investment. The reason is that more and more investors and central banks are observing changes in the monetary system and can make their own predictions about what might happen globally in the future. The local market is expected to continue to grow regardless of gold events. Inflation, falling interest rates and geopolitical tensions are currently influencing the gold price. Considering that we are living in a new era of global wars and conflicts, any such event would cause anxious investors to turn to the safety of the yellow metal.
“Investment gold has a low correlation with other financial instruments such as stocks, bonds or cryptocurrencies. For examples, when the stock market, stock and property values are falling, gold usually doesn’t have problems. Inflation has been the biggest factor pushing up the price of gold in recent years. In addition, gold is globally recognized and standardized everywhere. It is not tied to one country, one market or one currency. It can be bought and sold anywhere in the world at a price close to the international market price. This gives investors great flexibility and makes gold an extremely accessible investment,” says Victor Dima, adding that “an important factor that makes gold so attractive to investors is its limited offer. This gives additional price stability.”