It's basically flown against all the rules in the macro playbook and it's led some people to scratch their heads, wonder if there's a big mystery buyer in the market because it really doesn't make sense.

One country has been key to why gold's value has soared.

This bar is around 100 grams and it's around 10,000 US dollars.

And this has revealed just how nervous Chinese consumers are.

So what's driving this in 2024 and will it last?

I've never seen their desire to hide their wealth away from somewhere as strong as now.

As a bit of a primer, it's worth quickly looking at just how much gold actually exists.

The finite quantity and near indestructibility of gold underpins its value.

About 212,000 tonnes have been mined from the earth, it's estimated, almost half of that in jewellery.

Most of the rest is in bars and coins, in banks or private vaults around the world.

It's harder to imagine a safer asset than gold.

It's a heavy thing, the logistics of even coming over and stealing it and seizing it.

It requires a lot of logistical thinking and legwork there.

It's one way gold earned a reputation for being a haven from volatility.

Gold isn't like the US dollar.

The US can seize and freeze US dollar assets very easily.

We saw that in 2022.

And that particular episode has really influenced the way a lot of the emerging market world thinks about how to allocate your reserves and stay safe in a world where at this point, who knows what's next.

In the first half of 2024, war in Ukraine and the Middle East, as well as the prospect of lower US interest rates, all nudged the price up.

So who's been driving gold prices in 2024?

First, central banks.

They've been buying up quite a lot of gold, hoovering it up really over the last two years.

You've had analysts from Goldman Sachs pointing to emerging market central banks as being the real driver behind gold's incredible rally this year.

In fact, it's been the dominant driver of the upward gold move since 22.

The moment that Russian financial assets were blocked, then that sparks a lot of concern from a lot of emerging markets and China in particular that, who knows, this might happen to them one day.

The People's Bank of China embarked on an 18-month buying spree in 2023 and 2024, purchasing gold to diversify away from US dollars as tensions with America grew.

The central bank's now sitting on nearly 2,300 tonnes.

Which brings us to the other driver that pushed up gold's price, China's retail might.

When you buy traditional Chinese gold jewellery, you're not just buying the design.

You're quite literally buying its weight in gold.

This is the Chinese bangle.

Normally in the tradition, the parents, the grannies, the family will pass this Chinese jewellery to the next generation.

So they pass on to you as a luck to give you some blessing.

And at the same time, it's more like passing on some of the tangible assets to the next generations as well.

It is a tangible representation of wealth.

As Chinese consumers joined in the rush earlier in the year, gold's value accelerated even more.

Social media was awash with hype.

China's now the world's biggest retail buyer of gold, purchasing roughly a thousand tonnes in 2023, mostly in jewellery.

But Chinese gold demand hasn't been driven by people spending extra cash.

Quite the opposite.

China's economy is struggling.

Why does this market keep faltering?

A swinging local stock market, limited investment options and a persistent property crisis is dragging on the Chinese economy.

Over the last three years, China's property market has been battered.

Homes were a key store of value for many Chinese.

As the crisis has dragged on, billions have been wiped off household wealth.

Government figures show at least 380 million square metres of excess housing in China.

That's equivalent to the size of Detroit.

And despite Beijing unveiling its biggest package yet to reduce borrowing costs, prices have continued to slump.

In the last 20 or 30 years, I have not seen, like in general sense, the Chinese population has been so worried about the future, the economic future.

Anxiety lingers about jobs, wages and what lies ahead for China.

And I've never seen their desire to hide their wealth away from somewhere as strong as now.

Evidence of China's changing consumption of gold can be found here in Shenzhen's Shuibei market.

Nearly 14 billion US dollars of gold was sold here in 2023.

But by this fall, things had changed.

In October, gold's price peaked just shy of $2,800, an all-time high.

Chinese jewellery buyers said, enough's enough.

Sales collapsed.

So I talked to my old friends to get an idea like what has been happening in China's jewellery gold market recently.

They told me the sales in October was so bad that the whole entire Shuibei area only sold one tonne of gold in October.

In a normal month, the sales of gold is still between 20 tonnes and 40 tonnes a month in a week season.

Chinese consumers helped push gold's price so high, they were priced out of the jewellery they'd been buying.

At the same time, those with wealth bought these.

Helping nudge gold's value to a record high.

But why is this happening?

Who's buying at this price?

I think one of the most interesting things about gold right now is that you're seeing a lot of demand for the physical bullion.

There's cost of carry charges associated with physical bullion and you have to pay storage fees as well.

So if you're willing to take on those extra costs just to have a physical piece of bullion in your ownership, I think that suggests there are deeper underlying concerns about where the world is headed.

Sales of bars and coins are up nearly 30% this year.

It all links back to anxiety.

Gold is seen as the safest place to store your wealth, even when prices are this high.

From time to time, I always share conversations with my friends in China.

Some of them are very wealthy, they're working across various different industries.

Some in mining, some in jewellery, some in batteries, some in EV.

So they're all across different industries.

And a common sentiment that I get from them is they don't feel hope for the future.

People are actually getting less comfortable and want to do something to protect their own wealth.

And they what?

They turn to gold?

Yes, they buy physical gold bars.

But obviously they are not going to store it in a bank because they will be fined out.

So they store it in their own place.

Despite fluctuations, gold remains at a near record high and the trend since the millennium shows its journey.

If fear and instability have underpinned the rally, then 2025 will see it continue.

The incoming Trump administration has threatened Beijing with 60% tariffs.

Two social messages, at least two of them that he's laid out his plan on day one for tariffs.

And we all know that Donald Trump says he loves that word tariffs.

A potential escalation of US-China trade tensions could threaten already weak Chinese growth and upend global markets.

You're going to have central banks look at Trump and potentially what could be a erratic foreign policy and get a little bit more concerned about the safety of their reserves and their assets.

And in that context, gold makes a lot of sense.

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