Record-high prices unlikely to dim gold’s allure as Asia’s year of elections loom
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But he added that global prices are determined by a number of factors, and an election such as the one in Turkey, is only one component.
Turkey’s central bank had unveiled measures last year in May to mute gold demand among households and deter them from cash withdrawals, amid concerns the buying would deepen the country’s trade imbalances.
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“I think that was a wake-up call to some central banks as well, because they might have thought that their foreign exchange reserves were not freezable,” Fan said.
‘Buying gold is compulsory’: weddings, festivals fuel Asia demand as war rages
‘Buying gold is compulsory’: weddings, festivals fuel Asia demand as war rages
Geopolitical hotspots may widen
The Israel-Gaza war may not be significantly influencing prices, but it can jolt markets the longer it proceeds, he said.
In general, lower interest rates remove headwinds for gold, they allow more people to consider moving into gold, whether at a retail level or at an institutional level
Expectations that the US Federal Reserve will reverse its cycle of hiking interest rates this year may bolster gold demand further.
“In general, lower interest rates remove headwinds for gold, they allow more people to consider moving into gold, whether at a retail level or at an institutional level,” Fan said.
However, higher interest rates over the past year-and-a-half did not cause the precious metal’s price to fall because geopolitical tensions countered the negative sentiment by fuelling its safe haven demand.
Gold heads for first gain since 2020 as traders bet Fed will ease rates in 2024
Gold heads for first gain since 2020 as traders bet Fed will ease rates in 2024
“It will likely remain strong in China, despite the fact that the economy has been slightly faltering. We have seen pretty strong demand for retail gold among ordinary people throughout the course of 2023,” Fan said.
Investors’ concerns about mainland China’s economy, its rocky real estate sector as well as Beijing’s tensions with Washington, which may increase following Taiwan’s election, are expected to whet Chinese appetite for the precious metal, he said.
“I think that [global] uncertainty will continue to support the price of gold, and the gold market among investors.”
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