Investing.com -- Gold demonstrated a strong performance in 2024, marking a 27% gain and reaching an all-time high of USD 2,788/oz on October 30. This increase represents the fifth straight year of gains for the precious metal, with only cocoa and coffee surpassing it within the commodity sector.
According to UBS, central banks continued to be the mainstay of gold demand, with their purchases and the heightened global risk premiums driving gold prices. Despite the breakdown in the relationship between gold and real interest rates, these factors have kept the gold market buoyant.
Preliminary estimates indicate that central bank demand for gold in 2024 was around 1,000 metric tons (mt), slightly lower than the previous two years. The year 2022 saw the highest annual purchase in history at 1,082 mt.
Diversification has been a crucial factor in gold's record-breaking rally. This trend is expected to continue due to the ongoing trade and geopolitical uncertainty, along with concerns over US government debt.
As a result, strong official sector gold purchases and diversification demand from less rate-sensitive parts of the investment community are expected to continue. This leads to a maintained long position on gold in the global strategy, with a target of USD 2,850/oz by the end of the year.
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