The demand for gold has surged due to market uncertainty, with investors fearing they will miss out on the metal's rally.
In the third quarter of this year, global gold demand exceeded $100 billion for the first time, driven by investor buying. This has led to a record volume of gold demand, a 5 percent increase compared to the previous year.
The price of gold has risen by 34 percent this year, reaching a new high of $2,788 per troy ounce. This surge in demand is attributed to geopolitical tensions and central banks diversifying away from the US dollar.
Professional and institutional investors are particularly influenced by the fear of missing out (FOMO) and are quick to capitalize on any dips in gold prices. Total demand for gold investments, including bars, coins, and exchange-traded funds (ETFs), more than doubled in the third quarter. Inflows into gold-backed ETFs reversed a trend of nine consecutive quarters of outflows, indicating growing confidence among investors in gold as a safe-haven asset.
Family offices and high-net-worth individuals are turning to gold as a means of wealth preservation, driven by concerns about escalating debt levels in the US.
Despite the surge in investor demand, central banks have reduced their gold purchases due to the sharp increase in gold prices. However, the outlook for gold prices remains positive as western governments continue to cut interest rates.
The high price of gold has impacted the jewelry sector, with global jewelry consumption falling by 7 percent in the third quarter. Rising gold prices have made it difficult for consumers to justify purchases.
The interplay between investment demand and consumer consumption will be crucial in shaping the future trajectory of gold prices.