It’s been almost 50 years since the first day of trade in U.S. gold futures, and the precious metal is having a great time: so far this year, there have been 28 record-high settlements.
And gold may still have room to go because Western buyers and central banks around the world are buying a lot of it.
In a commentary released this week, Adrian Ash, head of research at BullionVault, said, “Central banks have bought a lot of gold in the last five years, nearly one out of every ten ounces produced by the mining sector.”
‘Central bank demand gold has surged in the past 5 years, swallowing nearly 1 in every 10 ounces produced by the mining sector on official data.’
“Central banks’ seemingly never-ending desire for gold has become ever-more important to gold’s underlying bull run, both in terms of fundamentals and for market sentiment as a whole,” he said.
Ash says that the amount of gold owned by central banks has grown by almost 19% in weight since the summer of 2004. Its value has also grown seven times, to $2.4 trillion in U.S. dollars, with Russia, China, India, and Turkey being the top four countries.
“The ‘free-floating inventory’ of tradeable gold is at or very close to exhaustion,” Paul Wong, market analyst at Sprott Asset Management, told MarketWatch. People are still buying gold.
According to the World Gold Council, which used data from the International Monetary Fund, the world’s official gold reserves reached 36,089 metric tons in May 2024. The World Gold Council says that about 212,582 metric tons of gold have been taken throughout history, so that’s a pretty big amount.
Torsten Slok, chief economist at Apollo Global Management, told MarketWatch that the reason gold prices are going up is that central banks are buying it. They are probably moving their money away from U.S. Treasury bonds because they are worried about the U.S. budget.
The most-traded December gold futures contract, GC00 2.16% GCZ24 2.16%, hit a record high of $2,538.70 an ounce on Comex on Friday and settled at a record high of $2,537.80.
The latest moves for gold come as the CME Group Inc. Geopolitical uncertainty remains elevated, which supports gold. Other investment opportunities for households in China — such as housing and stocks in China and Hong Kong — have declined, increasing demand for gold from Chinese households, Slok said.
