Record-high prices unlikely to dim gold’s allure as Asia’s year of elections loom

“All [elections] are all important. But some elections have the ability to influence world affairs more so than others,” said Shaokai Fan, Global Head of Central Banks for the World Gold Council (WGC), highlighting that gold prices rose over the past weekend when Taiwan held its elections.

But he added that global prices are determined by a number of factors, and an election such as the one in Turkey, is only one component.

Turkey’s central bank had unveiled measures last year in May to mute gold demand among households and deter them from cash withdrawals, amid concerns the buying would deepen the country’s trade imbalances.

03:21

US-led coalition strikes Iran-backed Houthi fighters in Yemen

“I think that was a wake-up call to some central banks as well, because they might have thought that their foreign exchange reserves were not freezable,” Fan said.

The Israel-Gaza war may not be significantly influencing prices, but it can jolt markets the longer it proceeds, he said.

Expectations that the US Federal Reserve will reverse its cycle of hiking interest rates this year may bolster gold demand further.

“In general, lower interest rates remove headwinds for gold, they allow more people to consider moving into gold, whether at a retail level or at an institutional level,” Fan said.

However, higher interest rates over the past year-and-a-half did not cause the precious metal’s price to fall because geopolitical tensions countered the negative sentiment by fuelling its safe haven demand.

“It will likely remain strong in China, despite the fact that the economy has been slightly faltering. We have seen pretty strong demand for retail gold among ordinary people throughout the course of 2023,” Fan said.

Investors’ concerns about mainland