Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
During gold’s record-breaking climb in 2024, the precious metal topped around 40 all-time highs, second only to the 57 achieved during the booming 1979 surge. While the acceleration of this gold rally was a surprise, the real mystery lies in its performance amidst an unfavorable macroeconomic environment. This uncharacteristic performance has left many investors questioning what hidden hand might be propelling gold prices at such a rapid pace despite obstacles.
Gold’s Mysterious Performance
Even though gold’s rise outperformed expectations, most question marks fall within the broader economic landscape. The 2024 economy was filled with factors that usually weigh heavily on gold prices, such as a strong US dollar, a booming stock market, and rising interest rates. Usually, gold moves inversely to these assets, falling when they rise.
Yet, last year’s economy seemed to defy expectations, acting as a tide that lifted all assets. For example, the USD closed out the year at a two-year high, the S&P 500 recorded the second consecutive year with 20% or higher yields, and entrenched inflation never reached the target range. In the face of these hurdles, gold posted a record-shattering leap.
“[Gold] has flown against all the rules in the macro playbook. It’s led some people to wonder if there’s a big mystery buyer in the market because it really doesn’t make sense,” explains Sybilla Gross of Bloomberg News.
Global Uncertainty Reaches Apex
Gold’s rally comes on the back of worldwide economic, political, and geopolitical upheaval. This trifecta set gold up for serious gains as investors actively seek safe-haven assets for stability and security.
Economic – The global economy hasn’t been able to get back on its feet after suffering a massive blow in the aftermath of the COVID-19 pandemic due to unchecked spending, limited growth, and high interest rates.
Political – The resulting financial hardship has contributed to widespread disillusionment of leadership across the globe with 70% of incumbents losing positions or seats in 2024 elections. However, the bold ideas of political newcomers only lead to more uncertainty.
Geopolitical – Two hot wars have kept the world on edge for years as warnings of World War 3 grow. The West’s freezing of Russian and other adversaries’ assets prompted central banks to accelerate gold purchases, aiming to bypass sanctions and assert greater economic independence.
Gold’s Top Driver is Central Banks
By far, central bank demand has been the most influential driver of gold’s stellar jump. National-level buyers have steadily accumulated the yellow metal through 2022, 2023, and 2024, with many experts expecting the demand to continue into 2025. Lately, emerging markets have taken an increasingly large chunk out of the gold consumption pie as the yellow metal plays a key role in their efforts to de-dollarize.
China is the “Mystery Buyer”
It’s widely recognized that central banks significantly influence gold prices. However, the lesser-known yet rapidly growing force is Chinese-centered demand. If any “mystery buyer” in the gold market quietly propels prices higher despite macroeconomic obstacles, China’s outsized consumption is undoubtedly it. The country’s demand is two-pronged:
People’s Bank of China (PBoC)
As a Russian ally and frequent recipient of US sanctions, China’s central bank has been strategically diversifying with gold while reducing USD reserves. The PBoC launched an 18-month gold-buying binge that lasted throughout 2023 and most of 2024.
China’s PBoC Central Bank Gold Buying from November 2022 to August 2024. Source: Bloomberg News
Following a brief drought in Q3, the central bank revamped its purchases in November 2024, bringing its total reserves in the range of 2,300 tons–the 6th largest holdings on the planet. With a leading position among emerging nations and gold-buying quotas in effect, experts anticipate Chinese demand to raise gold prices for the next decade.
Chinese Retail Demand
The PBoC’s gold purchase might generate more buzz, but the country’s legendary jewelry industry consumes more tonnage than the central bank. Retail jewelry buyers hauled in over 700 tons1 in 2023 and nearly 400 tons in the first three quarters of 2024. Considering that jewelry represents around 50% of global gold consumption, the world’s second-largest population has the retail might to move gold prices.
Chinese Retail Gold Buyers Switching to Bullion?
Retail jewelry purchases took a hit earlier this year as gold prices reached all-time highs. However, demand for gold bullion, primarily in the form of gold bars and coins, remained strong, jumping 30% on the year. As Samson Li, a researcher at the Commodity Discovery Fund, explains,
In the last 30 years, I have not seen the Chinese population so worried about the economic future or their desire to hide their wealth as strong as now.
Gold Thriving Amid Uncertainty
The world has undergone various challenges over the past three years with each country and individual investors facing unique obstacles. However, the throughline connecting all of these economic experiences is uncertainty.
Inflationary pressure, changing of the political guard, and rising geopolitical tensions have all contributed to more gold purchases on the governmental, institutional, and retail levels, underscoring gold’s status as the preferred safe-haven asset.
It all links back to anxiety. Gold is seen as the safest place to store your wealth, even when prices are this high.–
