The role of gold as a high-performing diversifier in Australian investment portfolios is poised to continue to grow in 2025, amid supportive global conditions and possibility of the Australian dollar facing pressure.
According to the World Gold Council’s Q4 and full year 2024 Gold Demand Trends report, total annual gold demand (including OTC) hit a new record high of 4,974 tonnes. This was driven by strong, sustained central bank buying and growth in investment demand.
According to the report, the combination of record high prices for the yellow metal, and volumes resulted in the highest ever total value of demand at US$382 billion ($608 billion).
Central banks continued to buy gold at an eye-watering pace in 2024, with purchases exceeding 1,000 tonnes for the third year in a row. Buying ramped up significantly in Q4 2024, reaching 333 tonnes and bringing the annual total for central banks to 1,045 tonnes.
Global investment demand increased 25% year-on-year to 1,180 tonnes – a four-year high – driven by a revival in gold ETF demand in H2 2024. Global gold ETFs added 19 tonnes in the December quarter, marking two consecutive quarters of inflows for the asset class.
The World Gold Council’s Mid-Year Outlook has revealed that Gold has risen by 12%
Bar and coin demand stayed largely in line with 2023 volumes at 1,186 tonnes in 2024, the World Gold Council’s report says.
Commenting on demand trends in Australia, Shaokai Fan, Head of Asia-Pacific (ex-China) and Global Head of Central Banks at the World Gold Council says Australian investors drove an impressive 20% year-on-year rebound in demand for gold bars and coins during Q4 2024, making Australia the second-strongest western market after Canada in terms of growth.
“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,” says Fan.
“Despite a marked shift in investor sentiment, Q3 and Q4 investment was not enough to offset the first-half downturn, leaving a 17% decline in annual demand for bars and coins in Australia.
“Meanwhile, investment in gold-backed Australian ETFs flipped back to positive in 2024, mainly supported by record inflows in Q3 and continued yet milder demand in Q4.
“Positive flows, coupled with a surge in the gold price, pushed total gold ETF assets under management in Australia toUS$3.6 billion, a year-end record, up from US$2.7 billion in 2023, whilst collective holdings rose to 42 tonnes.”
According to Fan, record-high gold prices and tighter consumer budgets however continued to dampen jewellery demand, contributing to a 10% fall in demand over Q4, pushing annual consumption to a four-year low, down 24%.
“Overall, contrasting demand factors across the gold spectrum saw December quarter’s total Australian gold consumption rise 5% year-on-year in Q4 but fall 20% in 2024 – a year in which A$ gold jumped 38%, affirming gold as Australia’s best-performing asset of the year,” Fan adds.
“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.”
Louise Street, Senior Markets Analyst at the World Gold Council, adds that unsurprisingly high prices dampened demand in the jewellery sector, with annual consumption decreasing by 11% to 1,877 tonnes.
The decline was driven largely by weakness in China (down 24% year-on-year), though Indian demand remained resilient, dropping just 2% in 2024, in a record-high price environment.
Meanwhile, the technology sector saw its strongest quarter since Q4 2021, with demand reaching 84 tonnes. A modest rise in gold volumes used in artificial intelligence (AI) and electronics contributed to a 7% year-on-year increase, netting at 326 tonnes.
Total gold supply increased 1% year-on-year, reaching a new record high of 4,794 tonnes. Growth in both mine production and recycling contributed to the increase in total gold supply.
“Gold once again dominated headlines in 2024, with prices reaching 40 record highs last year. Yet, the demand trajectory of 2024 was far from linear, with central banks posting strong demand in Q1 before moderating through the middle of the year and finishing with a strong Q4,” Street says.
“Likewise, 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. This was fuelled by the start of rate cutting cycles by many central banks and heightened global uncertainties, including the US presidential election and escalating tensions in the Middle East.
“In 2025, we expect central banks to remain in the driving seat and gold ETF investors to join the fray, especially if we see lower, albeit volatile interest rates. On the other hand, jewellery weakness will likely continue as high gold prices and soft economic growth squeeze consumer spending power. Geopolitical and macroeconomic uncertainty should be prevalent themes this year, supporting demand for gold as store of wealth and hedge against risk.”
Write to Adam Orlando at Mining.com.au
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