Investment in gold is rapidly increasing
Geopolitical tensions and expected interest rate cuts from the Fed have sparked buying frenzy in many countries around the world. Alongside central banks, individual investments are rapidly increasing in countries like Germany, China, and South Korea.
Gold, which has been remembered as a significant investment asset during crisis periods in the pandemic, continues to be a solid investment during times of war and crisis. Particularly, the anticipation of a decrease in the dollar index with the onset of Fed interest rate cuts in the second half of the year is increasing the allure of gold. This is triggering gold investments worldwide.
China increases its gold reserves by 60 tons in a month
The People’s Bank of China (PBOC) increased its gold reserves for the 18th consecutive month in April. The amount of gold bullion held by the PBOC increased by 60,000 ounces last month, reaching 2,264 tons. Amid economic uncertainties, young consumers are turning to gold as a valuable asset. According to NDTV, surveys show that 70 percent of consumers between the ages of 18 and 40 plan to purchase pure gold jewelry.
German households hold over 9,000 tons of gold
According to a survey conducted by Reisebank, Germans increasingly trust gold as protection against inflation. The gold stocks held by private households in Germany as investment in bullion or coins have increased by 35 tons since 2021, reaching 5,229 tons. The remaining 3,805 tons are held as jewelry, totaling over 9,000 tons. Together with the central bank’s gold reserves of 3,353 tons, it is revealed that 5.9 percent of the world’s gold belongs to Germany. The value of this gold is approximately 750 billion euros.
Gold is sold like cakes in supermarkets in South Korea
Demand for bullion and coins in South Korea increased by 27 percent annually, reaching 5 tons. The country’s largest supermarket chain, CU, has started offering mini gold bullions to customers. CU began selling gold bullions weighing between 0.1 grams and 1.87 grams. Since its introduction, people in their 30s have accounted for over 41 percent of total sales. People in their 20s accounted for 6.8 percent of all sales.
Although consolidation is expected in the short term, a new record is expected by the end of the year
The outlook for gold demand worldwide continues to be shaped by expectations of Fed interest rate cuts. While expectations shifting towards September may slow down the pace of gold, ongoing attacks by Israel, which has not accepted the ceasefire offer in the Middle East, are causing safe haven purchases of the precious metal. In this scenario, while prices are hovering above $2,300 in the short term, there is a possibility of consolidation. If $2,300 is breached, it could lead to sales down to $2,267. However, in the medium term, due to the continued validity of all factors supporting gold, the expectation of a rise is maintained. Wells Fargo predicts $2,500 for the end of the year.
