An interesting article from mining com - /web/golds-perfect-storm/
If you can't be bothered reading the full article, read the conclusion which I'll paste here
Conclusion
Gold may have seen a pullback since the heady days of last summer when it was trading around $1,800, $1,900, even crossing over $2,000 briefly, but a perfect storm for gold is brewing once again.
Let’s look at the facts.
On the supply side, we have mined gold supply unable to keep up with demand — without recycling jewelry. Peak gold was reached in 2019 and output continues to lag. Last year the amount mined fell 6.5% and this year it’s predicted to fall 3%. Where I live that means a 9.5% decline over two years.
On top of this, the reserves of the major gold mining companies are depleting, and there is a dearth of new discoveries to replace them. Any junior gold company with a decent-sized, scalable deposit will surely be the belle of the ball as far as attracting potential acquirers or joint-venture partners.
China has just announced it is importing 150 tonnes of gold. Is it a coincidence that China also last week became the first major economy to unleash a central bank digital currency, and that the global share of USD foreign exchange reserves in Q4 matched a 25-year low? I don’t think so.
Since the trade war started between the US and China, Beijing has grasped at every opportunity to make itself independent of the US dollar-denominated trading system and this is more evidence of the fact. China has its Belt and Road, its five-year plans, and monopolizes several of the world’s most important metals markets. It doesn’t need the US and the country is preparing, through a massive influx of gold imports, for the time when the USD is no longer the reserve currency and the yuan can stand on its own, backed by gold.
The demand side of the equation for gold is also building, fast.
We already have negative real interest rates — always a positive for gold prices — the US Federal Reserve has said it will tolerate inflation beyond 2% (we are already at 2.6%) and has no intention of raising interest rates for the foreseeable future. Low rates are also great for gold prices, as is inflation, for which gold is the time-honored defensive play.
Anyone who buys groceries and gas is already seeing their purchasing power eroded on a daily basis due to inflation, and this inflation is usually not counted in official government statistics.
Unconvinced inflation is coming like a slow-rolling tsunami? Check out the ships lining up at the Port of Los Angeles waiting to unload their cargo originating from Chinese factories — purchased from the labor of American workers and a crisp $1,200 check (soon to be $1,400) from the US government.
Even with Trump out of the picture, the world is still a dangerous place, evidenced by what is happening in Ukraine right now.
Satellite images show Russia has moved warplanes to Crimea and bases near Ukraine, adding, states the Wall Street Journal, to its capability for military or political intervention.
Gold’s safe haven demand status is being triggered by what looks like an attempt to intimidate the Ukraine government and send a message to the Biden administration which has taken a hard line on Russia.
It’s hard to say how this one will play out, but from the factors we have outlined, all indications point to another gold run amid rising geopolitical tensions, tighter supply, central bank gold buying, low interest rates, negative real yields, and what could be the most inflationary period in decades.
(20min delay)