Joe Cavatoni: What’s Next for Gold After 2023’s Record Total Demand?

Led by China, demand from these entities came to 1,037.4 metric tons (MT) last year, just 45 MT less than the record set in 2022. Behind China, which took in 224.88 MT of gold, were Poland at 130.03 MT and Singapore at 76.51 MT.

‘I think the pace for the central banks to continue to add gold to their portfolios — in particular the emerging market central banks that have large dollar and euro exposure — continues to be a strong case,’ Cavatoni said about 2024.

While central banks were avid buyers of gold last year, investment demand took a hit, dropping to a 10 year low of 945.1 MT. According to Cavatoni, the fall came on the back of a third consecutive year of exchange-traded fund outflows. Bar and coin investment was also slightly weaker year-on-year, dipping by 3 percent.

Overall gold demand excluding OTC clocked in at 4,448.4 MT for 2023, while the amount including OTC and stock flows was 4,899 MT, the highest level on record. Mine production came to 3,644.4 MT, a 1 percent rise from the previous year.

Looking at where the gold price may go in 2024, Cavatoni said it will be important to watch the US Federal Reserve.

‘We’ll see when and how the Fed deals with where rates are, and that cycle. That’s going to give us that breakout. You can very simply see another strong performance like we saw in 2023 based on how monetary policy develops,’ he said.

Cavatoni continued, ‘With that comes a very, very strong case for the systemic risk, the event risk and the hedging risk that come along with a very, very volatile geopolitical landscape getting more complicated as we speak … so you’ve got a strategic case to be made in terms of when and how monetary policy develops, but also you’ve got this tactical moving market in terms of geopolitical and political events that could keep gold very top of mind as a safe-haven hedge.’

Watch the interview above for more from Cavatoni on gold demand, plus overall market trends.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.