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

From Indonesia to India, the world’s largest democracies will be heading to the polls in Asia, a region which has traditionally been the largest gold consumer

Geopolitical tensions have kept gold prices above the US$2,000 range this year

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Geopolitical tensions have kept gold prices above the US$2,000 range. Photo: Shutterstock

Published: 3:30pm, 22 Jan 2024

Gold’s lustre shone brightly through 2023 amid geopolitical tensions, and its demand is likely set for another bumper year with elections looming throughout Asia, as well as more safe-haven buying by central banks expected.

The price of gold rose by 15 per cent through the year to hit an all-time high of US$2,135.39/oz in December, driven by geopolitical tensions in Gaza and Ukraine, as well as hopes the US Federal Reserve will cut rates.

From Indonesia to India, the world’s most populous democracies will be heading for polls in Asia this year, a region which has traditionally been the largest gold consumer. The United States will also be among 70 other countries holding elections.

“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.

William Lai Ching-te, a candidate whom Beijing branded a “troublemaker,” won in the Taiwanese presidential election, possibly fuelling cross-strait tensions. Investors flock to gold during times of uncertainty because it is considered as a store of value.

In the run up to Turkey’s elections last year, local demand for the precious metal surged as general uncertainty caused volatility in the national currency the lira, forcing local authorities to intervene, Fan said, citing how polls can influence buying.

A woman picks a gold earring at a jewellery shop in India. The country is traditionally one of the largest buyers of gold. Photo: Reuters

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.

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