Gold Demand Surges to Record Levels in 2024, Driven by Central Banks and Investors

The global gold market experienced an unprecedented year in 2024, with demand reaching record highs across multiple sectors. Total gold demand, including over-the-counter (OTC) investments, increased by 1% year-over-year in the fourth quarter, bringing the annual total to an all-time high of 4,974 metric tons. This surge was fueled primarily by central banks and investors who continued to view gold as a strategic asset in an environment of economic uncertainty, geopolitical instability, and shifting monetary policies.

One of the most significant drivers of demand was central bank purchasing, which continued at an extraordinary pace. For the third consecutive year, central banks bought over 1,000 metric tons of gold, with net acquisitions in 2024 totaling 1,045 metric tons. The fourth quarter alone saw purchases amounting to 333 metric tons, marking an acceleration in buying activity compared to earlier in the year. This ongoing accumulation reflects a broader trend of diversification among central banks, particularly in emerging markets, as they seek to reduce reliance on the U.S. dollar and bolster financial stability. Over the past 15 years, central banks have consistently increased their gold holdings, with the 2024 purchases far exceeding the average annual acquisition of 473 metric tons recorded between 2010 and 2021.

Investor activity also played a crucial role in gold’s record-breaking performance. Annual investment demand reached a four-year high of 1,180 metric tons, representing a 25% increase from the previous year. This rise was particularly notable given the shift in exchange-traded fund (ETF) dynamics. Unlike the heavy outflows seen in the three prior years, 2024 marked a stabilization in gold ETF holdings, indicating renewed investor confidence in gold as a long-term asset. Additionally, bar and coin investment remained robust, with total demand for the year aligning closely with 2023 levels at 1,186 metric tons. However, the composition of demand shifted, with bar investment growing while coin purchases declined slightly. The fourth quarter saw a particularly strong performance in this segment, with demand surging by 20% compared to the third quarter. This spike was largely driven by investors taking advantage of a price correction in November, using the temporary dip as an opportunity to buy gold in anticipation of continued upward momentum.

Gold’s performance in 2024 was further bolstered by broader economic factors. The strength of the U.S. dollar throughout the year meant that gold’s price appreciation was even more pronounced when measured in other currencies, enhancing its appeal as a hedge against currency fluctuations. By the end of the year, gold had solidified its position as a key component of diversified investment portfolios, offering both capital appreciation and protection against market volatility.

The retail bullion market also experienced significant growth. The Royal Mint reported a 9% increase in revenue from gold bullion sales over the year, reaching record levels. The final quarter of 2024 was particularly strong, with sales surging 153% compared to the same period in 2023. Interest in gold bars, digital gold, and coins rose sharply, with the number of investors increasing by 12%. Bullion coin sales revenue was a standout, rising by 56% quarter-on-quarter in Q4 and an astonishing 206% year-on-year compared to Q4 2023. This surge in retail demand highlights gold’s enduring appeal among individual investors looking for a safe-haven asset amid economic turbulence.

Gold prices reflected this heightened demand, reaching an all-time high of $2,799 per ounce on January 30, 2025. This price surge was largely driven by increased investor interest as a response to aggressive U.S. tariff policies and broader economic uncertainty. Over the course of 2024, gold prices rose by more than 26%, outperforming the S&P 500 and reinforcing its status as a strong investment choice. Since 2000, gold has seen an almost 800% increase in value, underscoring its long-term appreciation potential.

Another factor supporting gold’s investment appeal is its favorable tax treatment in certain jurisdictions. Investments in gold can be exempt from capital gains tax (CGT), making it an attractive option for those who have already maximized their tax-efficient investment allowances, such as ISAs and SIPPs, ahead of the tax year’s end in April. This tax advantage, combined with gold’s ability to preserve wealth and act as a hedge against inflation, continues to draw both institutional and individual investors to the market.

While most sectors saw strong growth, the gold jewelry market was an exception. Jewelry consumption fell by 11% to 1,877 metric tons, as high gold prices made it more expensive for consumers to buy in large quantities. However, despite the decline in volume, total spending on gold jewelry actually increased by 9%, reaching $144 billion. This suggests that while consumers may have purchased less gold by weight, they were still willing to invest in high-quality pieces, reflecting gold’s enduring cultural and economic significance.

In addition to investment and jewelry demand, the technology sector contributed positively to the overall gold market. Gold demand for technology applications grew by 21 metric tons (7%) in 2024, driven primarily by the continued expansion of artificial intelligence and other advanced technologies that require gold components. This sector, while smaller in scale compared to investment and jewelry, represents a growing source of demand that could further support gold prices in the future.

Looking ahead, the outlook for gold remains strong. Central banks have signaled their intention to continue increasing their gold reserves, ensuring ongoing support for the market. Investor demand is also expected to remain resilient, particularly as economic uncertainty persists and interest rates begin to moderate. Given gold’s exceptional performance in 2024 and its long-standing reputation as a store of value, it is likely to remain a key asset in investment portfolios around the world. Whether as a hedge against inflation, a safe-haven asset in turbulent times, or a means of portfolio diversification, gold continues to demonstrate its enduring appeal in an ever-changing financial landscape.