Gold Demand Softens in Q2 But Analysts Expect Record Prices in 2024
Citi analysts predict that physical gold demand may have softened in the second quarter compared to the first, but it is still growing positively overall. They anticipate spot trading prices to reach a record average range of $2,400-$2,600 per ounce in the second half of 2024 as financial investors catch up.
Non-monetary gold imports into China decreased in Q2, but Citi projects a record onshore bullion import of 1,750 tons in 2024, marking an 18% year-on-year increase. Chinese retail gold imports are expected to represent 47% of world gold mine output in 2024.
Official sector gold demand has stabilized at a record level since 2022, with the potential to increase further due to trade wars and concerns about US fiscal policies. Citi analysts also predict a record central bank gold buying of around 1,100 tons in 2024.
Inflows into gold exchange-traded funds (ETFs) are expected to improve in the second half of the year as the Federal Reserve begins its rate-cutting cycle. Citi remains optimistic about gold physical uptake in the next 12 months, with a base case price target of $2,800-$3,000 per ounce by mid-2025.
In summary, despite a softening in gold demand in Q2, analysts are bullish on the outlook for gold prices in 2024. Factors such as central bank buying, Chinese retail demand, and ETF inflows are expected to drive prices to record levels in the coming years. Investors may consider adding gold to their portfolios as a hedge against economic uncertainties and potential inflation.