While central banks were a key driver of gold demand in 2024, purchasing over 1,000 tonnes of the precious metal throughout the year, new data reveals that a resurgence in gold exchange-traded fund (ETF) demand in the second half of the year helped push investment demand to a four-year high.
The Gold Council’s Gold Demand Trends: Full Year 2024 report stated that total demand for gold reached a record 4,974 tonnes in 2024, with global investment demand for the metal increasing 25 per cent year-on-year to 1,180 tonnes.
Key factors behind this rise in demand include heightened geopolitical uncertainties, shifting expectations around interest rates, and the strongest annual gold price performance since 2010, all of which fuelled interest in gold-backed ETFs.
The Gold Council predicts that in 2025, ETF investors are expected to play a greater role alongside central banks – which have dominated gold demand in recent years – especially if interest rates remain low and geopolitical risks continue.
Regionally, the report suggests that gold ETF investment in the US has the potential to attract substantial flows, even with intermittent periods of outflows. In Europe, the European Central Bank is expected to cut rates by 1 per cent in 2025, which could encourage some European ETF investors to return.
As expected, central banks were a major factor in gold demand in 2024.
The Gold Council highlighted strong evidence suggesting that central banks could continue their trend of net buying over 1,000 tonnes of gold in 2025, driven by global trade and economic tensions. However, they also noted that forecasting central bank demand is challenging, as it is often tied to policy decisions rather than just macroeconomic factors.
“Recent announcements of sales to manage currency volatility leads us to account for the risk further such developments elsewhere,” the council said.
In 2024, the combination of record-high gold prices and volumes led to the highest-ever total value of demand, which reached $382 billion.
Commenting on gold’s prominent role in global headlines, Louise Street, senior markets analyst at the World Gold Council, noted that gold demand throughout 2024 was “far from linear”, with central banks showing strong demand in Q1 before moderating mid-year, followed by a strong Q4.
She added: “The second half of the year saw a notable resurgence from Western investors which, combined with remarkable growth in Asian flows, brought global gold ETF flows into positive territory in the third and fourth quarters.”
As expected, high gold prices dampened demand in the jewellery sector, with annual consumption decreasing by 11 per cent to 1,877 tonnes. The decline was largely due to weakness in China (down 24 per cent year-on-year), though Indian demand remained relatively resilient, dropping just 2 per cent despite record-high prices.
Looking ahead to 2025, Street said, “Jewellery weakness will likely continue as high gold prices and soft economic growth squeeze consumer spending power.”
The technology sector experienced its strongest quarter since Q4 2021, with demand reaching 84 tonnes. A modest increase in gold use for artificial intelligence and electronics contributed to a 7 per cent year-on-year rise.
Gold – ’Australia’s best performing asset’
Australian investors drove a 20 per cent year-on-year rebound in gold bar and coin demand during the December quarter, making Australia the second-strongest Western market after Canada, despite a 17 per cent annual decline due to a downturn in the first half of the year.
“The late 2024 surge extended the positive momentum seen in Q3 2024, highlighting how local investors have capitalised on the strongest gold price rally on record, and continued to ‘buy the dip’ after October’s record highs,” said Shaokai Fan, head of Asia-Pacific (ex-China) and global head of central banks at the World Gold Council.
“Despite a marked shift in investor sentiment, Q3 and Q4 investment was not enough to offset the first-half downturn, leaving a 17 per cent decline in annual demand for bars and coins in Australia,” he added.
Meanwhile, investment in gold-backed Australian ETFs returned to positive territory in 2024, mainly driven by record inflows in Q3 and continued but milder demand in Q4.
“Positive flows, coupled with a surge in the gold price, pushed total gold ETF assets under management in Australia to US$3.6 billion, a year-end record, up from US$2.7 billion in 2023, whilst collective holdings rose to 42t,” said Fan.
Overall, contrasting demand factors across the gold spectrum saw total Australian gold consumption rise 5 per cent year-on-year in Q4 but fall 20 per cent for the full year – a year in which the Australian dollar gold price rose 38 per cent.
Fan concluded, this affirmed “gold as Australia’s best-performing asset of the year”.
“With global conditions largely supportive of gold and the Australian dollar possibly facing pressure, we anticipate gold’s role as a high-performing diversifier in Australian investment portfolios will continue to grow in 2025.”
