Will Record High Gold Prices Impact Demand for Gold?

As 2023 draws to an end, gold has gone on a tear, rising to new highs over $2,100 an ounce on Monday. But with gold prices rising, will that dampen demand for gold in the coming year?

Gold can be funny sometimes, particularly when it comes to investment demand for gold. While with most goods, the more expensive they get the less people buy them, with gold it can be the case that the higher the price rises the more gold people buy.

Once gold starts into a bull run, people begin to think that it will keep going, and so they seek to buy more, at least when it comes to gold coins and gold bars.

That rising gold price, however, can dampen demand for gold jewelry and for gold demand from industry. But if investment demand for gold counteracts that, falling demand in other sectors can be overcome, and the gold price may continue to rise.

So have record gold prices started to impact demand for gold?

Assessing Gold Demand

Fourth quarter gold demand statistics from the World Gold Council won’t be available until early next year. In the meantime, we might look to sales figures from the US Mint as a proxy of sorts for gold demand.

The US Mint produces the Gold American Eagle series of coins, which have become a popular bullion coin for those looking to buy gold. And their popularity has grown this year, with overall gold sales already 9% higher than last year, with a month of sales still remaining in the year.

But sales in November seemed to fall off a cliff compared to October’s 108,000 ounces of sales, with only 47,000 ounces of gold sold in November. Could that have been the result of higher gold prices impacting gold demand?

Looking at previous years’ sales figures, that doesn’t seem to be the case. Last year, for instance, sales went from 62,500 ounces in October to 6,000 ounces in November and 4,000 ounces in December, before picking back up significantly in January.

What this indicates more likely is that the Mint is winding down 2023 production and gearing up for 2024 production. And the fact that November sales this year are 20 times higher than last year’s sales in November would seem to indicate that gold demand remains strong this year, despite record high prices.

Gold Price This Year

Gold, like other popular assets, has been on a bit of a roller coaster this year. It started the year at just over $1,800 an ounce and had its fair share of ups and downs.

The bank failures in March helped shoot the gold price up, but the calm of the summer saw gold fall back to earth. Now that fears of recession and an economic slowdown are growing again, however, the gold price is newly resurgent.

There seem to be more and more indicators that the economy is slowing down, or that it could already be in recession. There is more and more talk of a “silent recession” that is impacting households negatively in ways that aren’t being reflected in headline macroeconomic data.

With gold seemingly ending the year on a strong note, there will undoubtedly be a lot of questions surrounding whether gold can continue its strong price growth into 2024. But the increased attention on the record high gold price can’t help but put an even bigger spotlight on gold.

Which Way Will Gold Go?

Gold has served as a safe haven asset and as a store of wealth for centuries. When times get tough, people turn to gold to help protect their financial well-being.

Since the 2020 recession gold demand has been strong. And events surrounding the bank failures earlier this year caused gold demand to surge even more.

If gold demand continues to strengthen, it could put even more upward pressure on the gold price. While many analysts had expected gold to challenge its all-time high prices next year, gold could end up performing even more strongly than many had expected.

Consider the fact that we’re already seeing gold break price records and we’re not even in an official recession yet. Stock markets are still soaring, the economy is supposedly still growing, and the White House is trying to sell the narrative that the economy is healthy and strong.

If a healthy, strong economy is seeing record high gold prices from people looking for a safe haven asset, how much higher could the gold price get once a recession occurs? And if the next recession is as bad as 2008 or even worse, could we see gold hit $2,500 an ounce or higher?

Many people are undoubtedly expecting gold to perform similarly to the way it did in the aftermath of the 2008 crisis, when it nearly tripled in price from its 2008 lows. And many of those people are taking advantage of gold IRAs to benefit from gold’s price growth.

A gold IRA is an IRA that owns and holds physical gold coins or bars. It offers the same tax advantages as any other IRA, and only differs in that it holds physical gold.

One popular method of funding a gold IRA is to roll over funds from existing retirement accounts such as a 401(k), 403(b), TSP, IRA or similar account into a gold IRA. That allows you the ability to protect your existing retirement savings with physical gold.

If you’re looking to protect your hard-earned money from the possibility of recession, maybe it’s time to start thinking about gold. And if the gold price ends up taking off, the sooner you start looking at gold, the better.

With over $2 billion in precious metals placements and thousands of 5-star reviews from our customers, Goldco works hard to provide you with quality gold options and exceptional customer service. Call Goldco today to talk to one of our representatives and learn more about how owning gold can benefit you.