Individuals shopping gold jewellery in Istanbul.Burak Kara | Getty Photos Information | Getty ImagesThe rally in gold continues with costs hitting an all-time excessive on Thursday — and there is room for it to rise extra as central banks proceed to buy bullion in report quantities. Costs might rise to $2,300 per ounce within the second half of 2024, particularly towards the backdrop of expectations that the U.S. Federal Reserve might reduce charges within the second half of 2024, Aakash Doshi, Citi’s North America head of commodities analysis, instructed CNBC. Gold is at the moment buying and selling at $2,203.Gold costs are likely to share an inverse relationship with rates of interest. As rates of interest dip, gold turns into extra interesting in comparison with fixed-income belongings resembling bonds, which might yield weaker returns in a low-interest-rate atmosphere. Macquarie has additionally forecast gold costs to notch new highs within the second half of the yr. Whereas acknowledging that bodily purchases of gold have given costs a raise, Macquarie’s strategists attributed the latest $100 spike in costs to “important futures shopping for” of their notice dated March 7.”Central banks, who’ve purchased historic ranges of gold over the previous two years, proceed to be robust patrons in 2024 as effectively,” World Gold Council International Head of Central Banks Shaokai Fan stated. These purchases have strengthened gold costs regardless of excessive rates of interest and a powerful greenback, market watchers instructed CNBC.Greater charges have a tendency to scale back the attraction of gold in contrast with bonds because it doesn’t pay any curiosity, whereas a stronger greenback erodes the sheen of greenback-priced bullion for holders of different currencies.Robust bodily demand for gold can also be fueled by its attraction as a safe-haven asset amid geopolitical uncertainties.”Previously decade, Russia and China have been the 2 largest patrons. Nevertheless, central financial institution purchases lately have diversified,” Doshi.China central financial institution high buyerChina is the main driver for each shopper demand and central financial institution gold purchases, and the nation’s not more likely to decelerate.Amongst central banks, the Individuals’s Financial institution of China was the most important purchaser of gold in 2023. China’s weak economic system and embattled actual property sector additionally drove extra traders towards the safe-haven asset, with particular person gold funding remaining strong, WGC stated. Poland’s central financial institution was the second-largest internet shopper of gold, snapping up 130 tons of bullion in 2023.Challenges of the Russia-Ukraine battle “good subsequent door” drives Poland’s want for stability, stated Wheaton Treasured Metals CEO Randy Smallwood.Poland’s central financial institution governor Adam Glapiński in 2021 had introduced plans to purchase 100 tons of gold in a bid to spice up the nation’s monetary safety, based on native media reviews.Singapore recorded the third highest internet gold purchases in 2023, pushed by purchases by the Financial Authority of Singapore (MAS), which purchased 76.51 tons.Whereas MAS didn’t disclose the explanation for the funding choice, Fan surmised that central banks throughout the board have been cautious of the geopolitical dangers from the continuing Russia-Ukraine battle.”They’ve in all probability been adjusting reserve allocations in accordance to their views on threat,” he stated. Retail purchasesStronger gold costs have been additionally pushed by retail purchases of bijou, bars and cash.On high of the Individuals’s Financial institution of China shopping for essentially the most gold amongst the world’s central banks, the nation additionally recorded the best quantity of retail gold purchases.”On the retail shopper stage, China was a significant factor in robust demand for gold final yr as people moved into gold to diversify from different asset courses,” Fan stated. In accordance with knowledge from the World Gold Council, China overtook India to grow to be the world’s largest gold jewellery purchaser in 2023. Chinese language shoppers purchased 603 tons of gold jewellery final yr, a ten% improve from 2022.Alongside China, shopper demand for gold in India can also be one of many world’s largest, stated Smallwood, particularly throughout India’s wedding ceremony season, which runs sometimes from October to December, and between January and March.”Gold is all the time the best type of worth reward that you could really give somebody inside India. It is an actual huge a part of the marriage season,” he stated.Lady shopping for jewellery at a showroom in New Delhi, India.Sonu Mehta | Hindustan Instances | Getty ImagesWhile India’s jewellery demand ought to proceed to be important, costlier gold might put some dent in that spending, WGC stated. India’s gold jewellery consumption demand dipped 6% to 562.3 tons in 2023 from a yr earlier.That stated, India’s funding in gold bars and cash grew 7% yr on yr. The nation’s central financial institution demand for gold additionally continues to be robust, with the Reserve Financial institution of India buying 8.7 tons of gold in January, marking the best month-to-month buy since July 2022.Other than China and India, Turkey’s gold demand final yr nearly doubled that of 2022, based on WGC data. Unrelenting shopper inflation, restricted obtainable various funding and home political uncertainty through the presidential elections final yr drove Turkey’s demand for the yellow metallic.Inventory Chart IconStock chart iconTurkish lira buying and selling at report low towards the dollar”Turkey recorded robust retail demand as effectively, with traders piling into gold through the presidential election final yr to guard towards potential volatility within the Turkish lira,” Fan added.Turkish annual shopper worth inflation not too long ago surged to 67.07% in February. The Turkish lira misplaced 40% of its worth towards the greenback prior to now yr, and is at the moment buying and selling at a report low towards the greenback.