The annual Asia Pacific Precious Metals Conference highlighted several key factors driving a surge in demand for gold across Asia, underscoring its status as a trusted safe-haven asset amid global uncertainty:
- Record-breaking Prices: Gold prices have surged by 16% since mid-February, exceeding $2,310 per ounce. This increase is attributed to inflating prices and heightened uncertainty globally.
- Political Risk and Elections: Over 40 countries are facing elections in 2024, intensifying political risk. Gold’s appeal as a safe haven is bolstered during periods of heightened uncertainty and potential economic turmoil.
- Chinese Influence: China remains a pivotal player in the global gold market, rivaling traditional financial hubs like London and New York in price influence. The country’s extensive history of valuing gold as a store of wealth, coupled with recent economic challenges, continues to drive demand.
- Regional Demand Dynamics:
- India: Despite a slight dip in demand between March and April, the country has regained momentum, particularly during festival seasons. Jewelers report increased sales, indicating robust consumer interest.
- Vietnam: The market is experiencing a projected 10% year-on-year growth in consumption for the first half of 2024, highlighting strong regional demand.
- Japan: Despite a weakening yen, demand remains high, reflecting sustained buying activity at historically elevated levels.
- Supply Dynamics: Reduced scrap metal supply in the region indicates that consumers are holding onto their gold rather than selling it, further supporting strong demand.
- Geopolitical and Economic Uncertainty: Analysts caution that while current market conditions favor gold as a safe haven, geopolitical stabilization post-elections could alter this landscape. However, ongoing economic and political uncertainties globally continue to underpin gold’s attractiveness to investors seeking security.
In summary, the robust demand for gold across Asia is driven by uncertainties in the geopolitical and economic spheres, reinforcing its role as a reliable asset during volatile times. As global events unfold, the appeal of gold as a safe haven is expected to remain strong, contingent upon continued uncertainties and investor risk perceptions.