Why Was 2023 Such a Good Year for Gold?

Gold has long been known as a safe haven and diversifying asset that investors turn to in times of economic and geopolitical distress. Last year was just such a year, with gold drawing the attention of investors of all stripes.

The decision to buy gold proved to be a wise one in 2023. During the year, the precious metal’s price soared to previously unseen heights with a gain of roughly 13%. It finished the year being named one of the best-performing assets of 2023.

In this article, we will explore several of the different factors that contributed to gold’s strong showing in 2023, and what investors can expect from it as we continue to move through 2024.

Why 2023 Was a Good Year For Gold

According to J.P. Morgan, “Gold prices soared to an all-time high of $2,135.39/oz at the end of 2023.” The firm attributed this growth to a weakening U.S. dollar. Additionally, they named the Fed and their decision on interest rates as another factor in gold’s growth.

These weren’t the only factors that helped gold reach its record price in 2023. The World Gold Council reported that “Central bank demand, primarily from EM institutions, was a significant contributor.” The organization estimated that the demand from central banks amounted to 15% of gold’s annual performance.

Additionally, the firm reported that “Emerging market (EM) demand for gold provided not only a ballast to lackluster developed market (DM) activity but also helped drive gold prices to record highs.” Another driving factor was the increased geopolitical risk that dominated the headlines towards the end of the year. Many named it a key contributing factor to gold’s price reaching all-time highs in December of 2023.