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3 Key Reasons Gold Prices Keep Bouncing Off All-Time Highs

Since the end of 2023 and into the first half of 2024 gold prices have remained particularly bullish and have been hovering around all-time highs. After a year of speculation as to which investors, funds, or countries were responsible for such an insatiable demand for the yellow metal, it has become clear that at least a large bulk of that demand has been driven from China as they increased their central bank’s reserves.

The likes of such demand has not been seen since 1967 when the U.S. dollar was gold-backed. By the end of September, gold demand had soared by 28% from the previous year, totaling 1,181 tons. The World Gold Council identifies this trend as a shift towards safer investments in response to soaring inflation rates.

The Long-Term View on Gold

Gold’s effectiveness as a hedge against inflation, or rather–the decline of the value of US Dollars, has served as a reasonable store of value, justifying a nation such as China increasing its reserves to help stabilize purchasing power. Despite differing opinions among analysts on its short-term efficacy, gold’s allure remains undiminished during economic uncertainties. This enduring trust underscores its value as a perennial asset in the global financial landscape.

Record Gold Purchases by Gold Buying Nations

In the recent quarter, central banks significantly ramped up their gold reserves, purchasing nearly 400 tons and pushing their year-to-date acquisitions to 673 tons. This robust activity includes both documented transactions and substantial unreported purchases. These aggressive buying patterns underscore a strategic movement among nations to fortify their financial reserves with gold.

Turkey has also led the global charge in gold acquisitions, closely followed by Uzbekistan and India. While exact figures are elusive due to inconsistent reporting by some countries, the scale of purchases suggests a broad-based trend of increasing gold reserves.

Indian consumers also have increased their gold jewelry purchases. But, beyond cultural practices, the Reserve Bank of India has been actively boosting its gold reserves to almost 800 tons. These strategic acquisitions are part of broader efforts to diversify the nation’s foreign exchange assets, particularly in light of recent economic pressures.

2025 Outlooks

Whether the demand for gold can and will continue to push the precious metal to new highs over the end of 2024 and into next year remains uncertain. Several banks, including JPMorgan, has set a target of $2,500 per ounce, suggesting significantly further upside. Of course, as inflation shows signs of ‘stickiness’ and Fed policy in the US remains uncertain, the only certainty is that gold remains at more volatile price action over the short-term until come price consolidation is reached.

Josh Dudick

Josh is a financial expert with over 15 years of experience on Wall Street as a senior market strategist and trader. His career has spanned from working on the New York Stock Exchange floor to investment management and portfolio trading at Citibank, Chicago Trading Company, and Flow Traders.

Josh graduated from Cornell University with a degree from the Dyson School of Applied Economics & Management at the SC Johnson College of Business. He has held multiple professional licenses during his career, including FINRA Series 3, 7, 24, 55, Nasdaq OMX, Xetra & Eurex (German), and SIX (Swiss) trading licenses. Josh served as a senior trader and strategist, business partner, and head of futures in his former roles on Wall Street.

Josh's work and authoritative advice have appeared in major publications like Nasdaq, Forbes, The Sun, Yahoo! Finance, CBS News, Fortune, The Street, MSN Money, and Go Banking Rates. Josh currently holds areas of expertise in investing, wealth management, capital markets, taxes, real estate, cryptocurrencies, and personal finance.

Josh currently runs a wealth management business and investment firm. Additionally, he is the founder and CEO of Top Dollar, where he teaches others how to build 6-figure passive income with smart money strategies that he uses professionally.