Asian markets have played an increasingly significant role in the recent fluctuations of gold prices, according to a report released by the World Gold Council. The analysis highlights how trading during Asian market hours has been a key driver behind gold price rebounds in the first half of 2024, while declines have frequently occurred when U.S. exchanges were active.
The report points to heightened geopolitical tensions and shifting investor sentiment as central factors influencing precious metal price movements this year. Demand for gold exchange-traded funds (ETFs) in Asia—particularly in China, India, and Japan—has been propelled by factors including geopolitical risks, strong local gold prices, and currency depreciation. In contrast, U.S. investors have tended to reduce their gold ETF holdings amid concerns over rising yields and sustained inflationary pressures.
Emerging-market central banks have been notable participants in the gold market, continuing to increase their reserves as part of diversification strategies. China, in particular, saw a 67 percent year-on-year increase in investment demand for gold during the first quarter, underscoring the country’s growing influence on the sector.
Despite a decline in gold prices to roughly $4,000 per ounce as of late June, down from a peak reached in late January amid Middle East unrest, the council’s midyear outlook suggests potential for price gains in the second half of 2024. The report indicates that renewed geopolitical shocks, expectations of lower interest rates, and greater long-term investor involvement could push prices toward $4,500 per ounce. However, a sustained move toward $5,000 per ounce would likely require strong and clear market signals.
Monetary policy remains a critical factor, with markets widely anticipating at least one additional interest rate hike from the Federal Reserve before year-end. In parallel, many central banks project increases in their gold reserves over the coming year. If these institutions were to expand holdings by 20 to 25 tonnes beyond recent trends, the council estimates this could support a roughly 1 percent rise in gold prices.
On the consumer side, India—the world’s second-largest gold market—may exert downward pressure on prices after the government implemented higher import duties and introduced measures aimed at limiting domestic purchases.
Other analysts also foresee a gradual recovery in precious metals prices. Carsten Menke, head of next-generation research at Julius Baer, noted that investors had shifted from buying gold to selling it due to renewed Federal Reserve concerns over inflation. He projected that although gold prices may not reach record levels in the near term, they are expected to regain some ground.
Overall, the findings underline the increasing prominence of Asian markets and emerging economies in the global gold trade, while emphasizing the metal’s sensitivity to complex geopolitical and economic dynamics.