However, many observers believed that gold should fall below $2,200 after rising non-stop from the low around $1,800 reached in October 2023. In reality, those who refused to buy near $2300, hoping for a better price, are now watching the price of gold move towards the $2700 level.
Looking at the official reports, China’s central bank may be among those who waited for a pullback and never got it. Sure, the market is always full of rumors indicating that China is still buying gold even though it claims otherwise in its reports, but these rumors cannot be proven.
Private investors are also late to the party. Flows in gold ETFs have turned positive since the start of the year, meaning the average investor has missed the rally.
With no material decline in gold prices in 2024, demand remained strong despite fluctuations in Treasury yields, the US dollar or the Fed’s policy outlook.
Simply put, this means that global central banks bought gold to diversify their assets, and that these purchases had little correlation with the gold price.
As mutual funds and retail investors increase their exposure to gold, they will push prices to new highs as central bank demand is likely to remain stable in the coming years.