Gold purchases this year are unlikely to meet 2023 levels, but a fall in inflation could prevent a drastic drop in demand, WGC said. “Should inflation drop significantly consumers might start to feel wealthier in real terms, which could mitigate some of the drop in demand.” Inflation in the U.S. came in at 3.3% on a 12-month basis in 2023, still above the Federal Reserve’s 2% target, with Fed Chairman Jerome Powell saying Wednesday that the U.S. Federal Reserve was unlikely to cut interest rates in March.
The announcement triggered a 3% fall in gold prices which stood at $2,064 during Asia’s Thursday morning trading session. “During periods of persistent strong hyperinflation, gold does very well. But during moderate inflationary periods, gold can go either way. It might be determined by other factors as well,” Fan said. Data from the World Gold Council showed that China dethroned India as the world’s largest gold jewelry buyer in 2023.
People in China bought 603 tons of gold Jewelry in 2023, a 10% increase from the previous year. This was largely due to a rise in weddings that were postponed after the economy reopened from the pandemic in late 2022, Fan noted.