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This article has been automatically translated from Dutch. Click here to see the orginal article including all links to sources.
This week, the media are heavily focused on various statements from Trump. In this weekly selection, we’re shifting our focus exclusively to the world of gold—fitting for Holland Gold, right? A lot has happened in the gold market: new records, ongoing controversy over gold shortages in London, and an explosive increase in the cost of borrowing gold. What does this mean for the gold price? And what does the latest report from the World Gold Council reveal about market trends? Find out here!
A new week, a new record for gold. Last week, the gold price broke through €87,000 per kilogram; this week, the precious metal briefly exceeded €89,000 per kilogram. We’re picking up where we left off last week, as the shortages of physical gold in London—the largest trading hub for physical gold—have not yet been resolved. This week, we saw short-term gold borrowing costs soar, leading to widespread speculation online.
Gold Borrowing Fees Skyrocket This Week (Source: Jan Nieuwenhuijs)
Last week, we covered the gold flow to the U.S., where inventories on the New York COMEX have surged by 88% since the elections last November. This has drained the London market. According to the Financial Times, traders are positioning themselves for potential import tariffs. Gold analyst Jan Nieuwenhuijs argues that it is primarily an arbitrage play. He suggests that the threat of import tariffs has made New York futures more expensive than the spot price in London. Arbitrageurs are closing this gap by buying in London and delivering in New York or borrowing gold from central banks such as the Bank of England (BoE). He also draws a comparison to 2020, when a similar situation occurred. According to Nieuwenhuijs, this ultimately had little impact on the gold price.
COMEX (New York) Stockpile (Source: Jan Nieuwenhuijs)
During a press conference, Dave Ramsden of the BoE was asked about the shortages, the long delivery times, and what measures the BoE is taking to address them. Ramsden emphasized that the Bank of England manages the second-largest gold reserve in the world, which has recently declined by just 2%. He explained that the U.S. gold market currently commands a premium over London, and various commercial players are trying to take advantage of this price difference. This has led to strong demand for delivery slots.
According to Ramsden, the BoE can meet this demand, but the delivery slots for the coming weeks are already fully booked. Existing relationships and counterparties have secured their allocations, while new buyers must wait longer. He pointed to the logistical challenges involved in the secure delivery of large quantities of physical gold. This, he said, explains the delays. So, the panic seems to be much ado about nothing.
Dave Ramsden at BoE Press Conference (Source: Bloomberg Television)
If we believe the experts, the situation described above has little impact on the gold price. Yet, the price continues to rise significantly. To understand why, let’s take a look at the latest Gold Demand Trends report from the World Gold Council.
Rising Demand for Gold in Volume and Dollars (Source: World Gold Council)
Global gold demand reached a record high of 4,974 tons in 2024, a 1% increase compared to 2023. The total demand measured in dollars rose significantly due to the record gold prices, reaching $382 billion. The last quarter of 2024 alone saw a value of $111 billion—the highest ever recorded.
Although total volume increased, demand for gold jewelry—the primary source of demand—declined by 11% to 1,877 tons due to high prices. However, demand in dollar terms still grew by 9%, as consumers continued to spend more on gold jewelry despite the lower quantities purchased.
Investment demand for gold reached a four-year high of 1,180 tons in 2024, marking a 25% increase from the previous year. Demand for bars and coins remained strong at 1,186 tons, while outflows from gold ETFs nearly came to a halt.
Central Bank Gold Purchases Since 2010 (Source: World Gold Council)
Central banks have played a crucial role in the gold market for years. In 2024, they were net buyers of gold for the 15th consecutive year, purchasing over 1,000 tons for the third year in a row. According to the report, Poland’s central bank was the largest buyer among central banks, adding 90 tons of gold. Other Eastern European central banks, such as those of the Czech Republic and Hungary, also increased their gold holdings. As usual, Turkey, India, and China were also major buyers. Officially, China purchased 44 tons of gold, but according to Jan Nieuwenhuijs, the real figure is much higher due to undisclosed purchases.
Overview of Central Bank Gold Purchases (Source: World Gold Council)
Demand from the technology sector for gold also rose by 7%, reaching over 326 tons. We previously highlighted how this diverse demand makes gold an attractive investment.
Gold mine production is expected to remain stable, while recycling output is likely to continue growing. The World Gold Council anticipates that in 2025, central banks and investors will dominate gold demand. They also expect geopolitical and economic uncertainty to reinforce gold’s role as a safe haven, keeping both price and demand high.
Both Citigroup and UBS raised their gold price forecasts earlier this week. Citi predicts $3,000 per ounce within the next three months, while UBS expects to see this price within 12 months.
To be continued!
