Gold Market Shifts Towards Physical Demand

The global gold market is undergoing a structural transformation, as physical demand increasingly dictates price action, breaking the long-standing dominance of paper markets. With gold repeatedly reaching all-time highs, Andrew Maguire’s forecast of a $3,000 gold price by the end of Q1 2025 is now coming to fruition.

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The Rise of Physical Gold Demand

Despite repeated attempts to suppress gold prices through synthetic selling, physical demand continues to drive the market. In recent weeks, gold has maintained levels above $2,900 in 25 out of 33 price fixes, highlighting the growing influence of physical buyers over speculative traders. Similarly, silver has faced strong demand, with resistance at $32 proving increasingly difficult to maintain.

Institutional Buyers Reshaping the Market

The market dynamics are shifting, with central banks and institutional investors accelerating their gold acquisitions. February witnessed premiums as high as $38 per ounce for immediate delivery, as buyers rushed to secure physical metal. COMEX open interest has contracted significantly, from 550,000 contracts to 490,000, indicating that bullion banks are not only covering short positions but also accumulating gold to meet growing delivery obligations.

Basel III and the Shift to Tier 1 Assets

The upcoming Basel III compliance deadline in July is forcing US markets to realign, further disrupting traditional price suppression mechanisms. Gold’s classification as a Tier 1 asset is reinforcing the transition towards long-term, physically backed holdings, reducing speculative volatility and enhancing its role as a safe-haven investment.

China’s Gold Buying Surge

Recent data does not yet reflect China’s renewed gold-buying activity, which resumed aggressively last Friday. As this demand becomes visible in official reports, it is expected to further fuel gold’s upward momentum, adding pressure on short sellers and reinforcing the long-term bullish outlook.

The Global De-Dollarisation Movement

Gold’s increasing role in global trade is evidenced by reports of Russia supplying gold to China via barter agreements, bypassing traditional financial systems. The growing preference for gold settlements outside the SWIFT network signals a broader shift away from Western-dominated monetary structures.

The Future of Gold Pricing

As gold futures open interest continues to decline, the ability of market makers to manipulate prices through traditional short-selling tactics is diminishing. The shift towards physical gold accumulation strengthens the long-term outlook for price appreciation, reinforcing gold’s role as a strategic asset in the evolving financial landscape.

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The opinions, analyses, and predictions expressed by Andrew Maguire in this content are his own and do not necessarily reflect the views, positions, or official policies of Kinesis.

This information is provided for informational purposes only and should not be considered financial advice. Kinesis assumes no responsibility for any investment or financial decisions made based on the information provided. Please consult with a qualified financial advisor for personalised guidance.