Gold Surges 60% in 2024 Amid Central Bank Buying and Market Speculation

Gold has surged to around $4,200 an ounce this year, prompting investors to reassess their portfolio allocations amid rising central bank and ETF demand. This rally is fueled by geopolitical uncertainties, resilient investor appetite despite dollar strength, and a large amount of liquidity still present in the financial system. Economist Ruchir Sharma warns that gold's recent price increase is driven more by speculative ETF buying than traditional safe-haven demand and cautions that if central banks withdraw excess liquidity, gold's role as a hedge could diminish. Historical patterns show gold has experienced similar sharp rises followed by significant declines, raising concerns about speculative excess and potential bubbles. Despite these warnings, some argue this time may be different due to global shifts like sanctions on Russia prompting central banks to diversify away from the dollar. Meanwhile, gold remains a central element in cultural festivities and consumer demand, especially during events like Diwali, where brands are expanding offerings to cater to evolving tastes.