Gold prices surged to a new all-time high on Thursday, signaling a continued rally driven by some factors, such as increased bullion buying by central banks. 

Gold Prices Are Likely to Continue to Surge

Aakash Doshi, Citi's North America head of commodities research, told CNBC that gold prices could reach $2,300 per ounce in the latter half of 2024. 

This projection is bolstered by expectations of potential rate cuts by the US Federal Reserve during the same period. Currently, gold is trading at $2,203 per ounce.

The relationship between gold prices and interest rates is well-established, with gold becoming more attractive as interest rates decline. In a low-interest-rate environment, investors tend to favor gold over fixed-income assets like bonds, which offer weaker returns.

Macquarie also anticipates a surge in gold prices in the second half of the year. According to Macquarie's strategists, the recent $100 spike in prices is attributed to substantial futures buying.

Central banks, particularly notable for their historic levels of gold purchases over the past few years, will continue to be significant buyers in 2024, according to World Gold Council (WGC) Global Head of Central Banks Shaokai Fan. 

This ongoing demand from central banks has contributed to the strength of gold prices despite prevailing high-interest rates and a robust dollar.

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China Leads in Driving Gold Demand

The appeal of gold as a safe-haven asset amid geopolitical uncertainties further bolsters its physical demand. Russia and China have been major buyers of gold in the past decade, with China emerging as a leading driver of both consumer demand and central bank gold purchases.

According to WGC, China's appetite for gold is unlikely to wane, particularly amid its economic challenges and the ongoing Russia-Ukraine conflict. In 2023, the People's Bank of China emerged as the largest buyer of gold, signaling a continued trend of robust individual gold investment.

Other countries, such as Poland and Singapore, have also significantly increased their gold purchases, driven by geopolitical risks and the desire for financial security. Poland's central bank, for instance, announced plans to buy 100 tons of gold to enhance the country's financial stability. 

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