Uncertain times trigger new gold rush

Geopolitical tensions, economic uncertainty and the growing demand from the central banks are currently driving the gold price. In February 2025, the gold price rose to $ 2,921 per ounce, an increase of 45 percent in the annual comparison. “The gold price reached historical highs in February. The reasons for this are an increased number of geopolitical risks, a significant uncertainty about the political measures in the second term of Donald Trump and the growing demand from the central banks for the precious metal “says Simon Lacouace, industry analyst at Coface. The accumulation of global crises has caused governments and private investors to increase their gold stocks since 2019 to ensure financial security. In 2024, 21 percent of total gold demand for central banks, an increase of 10 percentage points compared to 2019. “Gold stands for security. Gold is considered a system that retains its value even in uncertain times “explains Dagmar Koch, Country Manager Coface Austria.

Some of the largest economies in the world still keep only a relatively low proportion of gold in their reserves. In 2024, gold only made 6 percent of the total reserves of China. However, People’s Bank of China’s demand has increased significantly in recent years. “The analysis of gold price development shows a strong correlation of over 0.77 with the reserve structure of China. Against the background of the current volatile geopolitical environment, besides China, further emerging markets could try to reduce their dependence on the US economy and thus on the US dollar by increasing their gold reserves “says coFace industry analyst Simon Lacouace. This trend indicates that the upward pressure remains on the gold price, at least in the first half of 2025.

An attractive investment

“High gold ratings, expected interest reductions and dwindling investor trust drive the diversification of portfolios in favor of gold” forward “explains Koch. In addition, Gold exceeded the leading stock indices in terms of price returns and thus underlines its attractiveness as an anchor in stability. In 2024, 25 percent of global gold demand accounted for private investments.

In the meantime, the demand for gold for jewelry has decreased slightly compared to the years before Covid -19, around 7 percent between 2019 and 2024. In 2024, the demand from the jewelry industry made 40 percent of the overall demand for gold – a decline of 4 percentage points compared to 2019. This decline was particularly pronounced in important markets such as India, Pakistan and China, where high gold prices and the declining economic dynamic was Braking consumer demand.

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