Finance

Shares of HP dipped more than 1% in after-hours trading Monday following the news.
Berkshire still owns 51.5 million shares of HP, worth about $1.6 billion.

Warren Buffett tours the floor ahead of the Berkshire Hathaway Annual Shareholder’s Meeting in Omaha, Nebraska.
David A. Grogan | CNBC

Warren Buffett’s conglomerate Berkshire Hathaway has reduced its stake in HP to 5.2%, according to a regulatory filing released Monday night.
The conglomerate previously had a nine-day selling streak in mid-September through early October, bringing down the bet on the printer and PC maker to about 10%.

Shares of HP dipped more than 1% in after-hours trading Monday following the news.
Berkshire still owns 51.5 million shares of HP, worth about $1.6 billion based on Monday’s close of $30.37. The Omaha-based investing giant is still the third-largest institutional shareholder of HP, only behind BlackRock and Vanguard, according to FactSet.
Last month, HP issued first-quarter profit guidance that came below Wall Street estimates, according to LSEG, formerly known as Refinitiv. However, the firm kept its full-year earnings outlook, signaling that the demand in the personal computers market could still be recovering.
Berkshire initially bought the tech hardware stock in April 2022. The bet, however, hasn’t been lucrative as the stock is still below the level where it was first bought. Shares are up 13% this year, underperforming the Nasdaq Composite, which has rallied nearly 38%.

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Many Buffett watchers had already suspected that the Oracle of Omaha’s intention is to dump the stake entirely.

The 93-year-old investment icon views stock holdings as pieces of businesses, so he typically closes out a position once he starts selling.
“We don’t trim positions. That’s just not the way we approach it any more than if we buy 100% of a business,” he once said.Don’t miss these stories from CNBC PRO: More

Wells Fargo received an official notice from the Consumer Financial Protection Bureau on problems with its use of mortgage rate discounts, sources said.
Wells Fargo hired a law firm to grill mortgage bankers whose sales included high levels of the discounts, said the sources.
Several banks received MRAs about lending practices last year, the CFPB said without naming any of the institutions.
In their industry review, regulators found “statistically significant disparities” in the rates in which Black and female borrowers got pricing exceptions compared with other customers.

People pass by a Wells Fargo bank on May 17, 2023 in New York City.
Spencer Platt | Getty Images

Wells Fargo was snared in an industrywide probe into mortgage bankers’ use of loan discounts last year, CNBC has learned.
The discounts, known as pricing exceptions, are used by mortgage personnel to help secure deals in competitive markets. At Wells Fargo, for instance, bankers could request pricing exceptions that typically lowered a customer’s APR by between 25 abd 75 basis points.

The practice, used for decades across the home loan industry, has triggered regulators’ interest in recent years over possible violations of U.S. fair lending laws. Black and female borrowers got fewer pricing exceptions than other customers, the Consumer Financial Protection Bureau has found.
“As long as pricing exceptions exist, pricing disparities exist,” said Ken Perry, founder of a Washington-based compliance firm for the mortgage industry. “They’re the easiest way to discriminate against a client.”
Wells Fargo received an official notice from the CFPB called an MRA, or Matter Requiring Attention, on problems with its discounts, said people with knowledge of the situation. It’s unclear if regulators accused the bank of discrimination or sloppy oversight. The bank’s internal investigation on the matter extended into late this year, said the people.
Wells Fargo, until recently the biggest player in U.S. mortgages, has repeatedly felt regulators’ wrath over missteps involving home loans. In 2012, it paid more than $184 million to settle federal claims that it charged minorities higher fees and unjustly put them into subprime loans. It was fined $250 million in 2021 for failing to address problems in its mortgage business, and more recently paid $3.7 billion for consumer abuses on products including home loans.
The behind-the-scenes actions by regulators at Wells Fargo, which hadn’t been reported before, happened in the months before the company announced it was reining in its mortgage business. One reason for that move was the heightened scrutiny on lenders since the 2008 financial crisis.

Wells Fargo later hired law firm Winston & Strawn to grill mortgage bankers whose sales included high levels of the discounts, said the people, who declined to be identified speaking about confidential matters.

‘Proud’ bank

In response to this article, a company spokeswoman had this statement:
“Like many in the industry, we take into consideration competitor pricing offers when working with our customers to get a mortgage,” she said. “As part of our renewed focus on supporting underserved communities through our Special Purpose Credit Program, we have spent more than $100 million over the last year to help more minority families achieve and sustain homeownership, including offering deep discounts on mortgage rates.”
Wells Fargo was “proud to be the largest bank lender to minority families,” she added.
The bank later had this additional statement: “While we cannot comment on any regulatory matters, we don’t discriminate based on race, gender or age or any other protected basis.”

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Wells Fargo stock vs the Financial Select Sector SPDR Fund

Regulators have ramped up their crackdown on fair lending violations recently, and other lenders besides Wells Fargo have been involved. The CFPB launched 32 fair lending probes last year, more than doubling the investigations it started since 2020.
Several banks received MRAs about lending practices last year, the agency said without naming any of the institutions. The CFPB declined to comment for this article.

‘Statistically significant’

The issue with pricing exceptions is that by failing to properly track and manage their use, lenders have run afoul of the Equal Credit Opportunity Act (ECOA) and a related anti-discrimination rule called Regulation B.
“Examiners observed that mortgage lenders violated ECOA and Regulation B by discriminating against African American and female borrowers in the granting of pricing exceptions,” the CFPB said in a 2021 report.
The agency found “statistically significant disparities” in the rates in which Black and female borrowers got pricing exceptions compared with other customers.
After its initial findings, the CFPB conducted more exams and said in a follow-up report this year that problems continued.
“Institutions did not effectively monitor interactions between loan officers and consumers to ensure that the policies were followed and that the loan officer was not coaching certain consumers and not others regarding the competitive match process,” the agency said.

Honor system

In other cases, mortgage personnel failed to explain who initiated the pricing exception or ask for documents proving competitive bids actually existed, the CFPB said.
That tracks with the accounts of multiple current and former Wells Fargo employees, who likened the process to an “honor system” because the bank seldom verified whether competitive quotes were real.
“You used to be able to get a half percentage off with no questions asked,” said a former loan officer who operated in the Midwest. “To get an additional quarter point off, you’d have to go to a market manager and plead your case.”
Pricing exceptions were most common in expensive housing regions of California and New York, according to an ex-Wells Fargo market manager who said he approved thousands of them over two decades at the company. In the years the bank reached for maximum market share, top producers chased loan growth with the help of pricing exceptions, this person said.

Change of policy

In an apparent response to the regulatory pressure, Wells Fargo adjusted its policies at the start of this year, requiring hard documentation of competitive bids, said the people. The move coincided with the bank’s decision to focus on offering home loans only to existing customers and borrowers in minority communities.
Many lenders have made pricing exceptions harder for loan officers to get and improved documentation of the process, though the discounts haven’t disappeared, according to Perry.
JPMorgan Chase, Bank of America and Citigroup declined to comment when asked whether they had received MRAs or changed their internal policies regarding rate discounts.
— With reporting from CNBC’s Christina Wilkie.
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British payments startup SumUp has raised 285 million euros ($306.6 million) in an investment led by Sixth Street Growth and Bain Capital Tech Opportunities.
SumUp Chief Financial Officer Hermione McKee said the fresh capital gives the company “more firepower to act on opportunities” including acquisitions and new country launches.
SumUp confirmed the company is worth more than it was when it raised 590 million euros ($635.3 million) at an 8 billion euro ($8.6 billion) valuation in summer 2022.

SumUp Chief Financial Officer Hermione McKee said the fresh capital gives the company “more firepower to act on opportunities,” including acquisitions and new country launches.

British payments startup SumUp, known for its small card readers, on Monday announced it has raised 285 million euros ($306.6 million) in a bumper round of funding that values the company north of $8.6 billion.
Sixth Street Growth, the growth arm of global investment firm Sixth Street, led the investment in SumUp, while existing existing investor Bain Capital Tech Opportunities, fintech investment firm Fin Capital, and debt financing firm Liquidity Group, participated in SumUp’s latest round as well. The round predominantly consisted of equity, though a small portion of the funds was raised as debt.

SumUp Chief Financial Officer Hermione McKee said the fresh capital gives the company “more firepower to act on opportunities that we see arising over the course of the next two years.”
“If we think about our geographical expansion, in August we launched Australia as our 36th market globally,” McKee told CNBC in an interview last week ahead of the news.
“We have this foothold in Latin America and there’s more expansion that can be done there. Then we look at Asia, how do we think about that region, and then obviously opportunities across Africa. There’s so many opportunities globally. We’re constantly assessing this ‘buy versus build’ strategy.”
With this round, the company says it “continues to build further” on the valuation it attained in the summer of 2022, when SumUp was last valued at 8 billion euros ($8.6 billion) in a 2022 funding round that saw the firm raise a whopping 590 million euros of capital for growth and global expansion. A SumUp spokesperson confirmed the deal is an up round, meaning its valuation is higher than it was previously.
That’s no small achievement given the state of European technology valuations, which have taken a hammering over the past year as investors flee from tech due to higher interest rates and macroeconomic headwinds.

According to venture data firm PitchBook, median valuations declined in the third quarter across all stages compared to 2022, with late-stage valuations showing the most resilience and growth-stage the least.

Earlier this year, existing shareholders in SumUp sold stakes in the firm at a heavily discounted price to its last official valuation. One, online coupons site Groupon, disclosed in a filing with the U.S. Securities and Exchange Commission that it was selling off shares in SumUp at a price that would value the company at just 3.9 billion euros ($4.2 billion).

M&A shopping spree ahead

SumUp, which competes primarily with Jack Dorsey’s payments business Block, formerly known as Square, as well as PayPal’s iZettle, FIS’ WorldPay, Stripe, and Adyen, has been expanding into new lines of business lately, not least lending. The company launched a service that enables merchant to apply for a cash advance or business loans up to a certain limit based on their card sales revenues.
SumUp secured a $100 million credit facility from Victory Park Capital this summer to bolster its cash advance offering. McKee said that the lending product has been going well so far, with the vast majority of its merchants paying back in a timely manner.
“We’re seeing quick returns on that capital, and merchants that are genuinely supporting their growth. And then they’re able to repay that back in a short time periods for the transaction volume that we see,” McKee said.
“We haven’t seen any real pullback in terms of repayment data over the course of the last six months,” she added. “Our models are constantly iterating to make sure that that those factors we’re observing don’t become stale.”
SumUp also launched new point-of-sale offerings, including self-service kiosks that let customers order in stores using a touchscreen interface.
SumUp recently launched Apple’s Tap to Pay feature in the U.K. and the Netherlands, which enables people to tap their card or phone on a vendor’s iPhone using a smartphone app. It’s also been upgrading its existing point-of-sale systems, with its POS Lite and POS Pros countertop systems that can be paired with SumUp’s card readers.
Going forward, SumUp plans to explore more merger and acquisition opportunities to help it drive its expansion abroad.
“M&A is always something that’s on the table,” McKee said. “We have expanded into new geographies in the past with M&A. That’s something we’re always assessing. We have experience in both building an ecosystem as well as buying. And both of these things are available to us, obviously, yes, this just gives us greater optionality and the ability to move quickly, should we see the right opportunity arise.”
SumUp has no immediate plans to go public, McKee added, as it has ample access to capital in the private markets.
“I think it’s proven by this round that we actually have access to private pools of capital, so we don’t need to IPO,” she said.
“We’re constantly improving processes, actually making sure that we are operating at a standard and quality that is appropriate for public markets. But at the same time, this is not something that, you know, is imminent, and around the corner that we’re actively planning for today.” More

Arkhouse Management and Brigade Capital Management have offered to buy Macy’s Inc. for $5.8 billion, according to people familiar with the matter.
The offer values the retailer at $21 per share, compared to the company’s most recent close at just over $17 per share.
Macy’s sales have slumped over the past year as the legacy retailer struggles to keep up with online competitors.

People wait in line outside Macy’s before opening on “Black Friday” in New York City on November 24, 2023. The retail sector’s efforts to entice holiday gift purchases builds to a crescendo this weekend with the annual “Black Friday” shopping day followed by the newer “Cyber Monday.” (Photo by Yuki IWAMURA / AFP) (Photo by YUKI IWAMURA/AFP via Getty Images)
Yuki Iwamura | Afp | Getty Images

Arkhouse Management and Brigade Capital Management have offered to buy Macy’s Inc. for $5.8 billion, people familiar with the matter told CNBC on Sunday.
The offer values the retailer at $21 per share, according to the sources. Macy’s closed at just over $17 a share on Friday, down roughly 17% since the start of the year.

Arkhouse, a firm that primarily targets real-estate investment, and Brigade Capital, an asset management firm, would be willing to offer a higher bid based on due diligence, the sources said. The group would already be paying a premium for the department store, which has struggled to keep up with online competitors.
Macy’s has made several efforts to draw customers back to its brick-and-mortar chains. In October, it announced 30 new store locations at strip malls as it tried to pivot away from the traditional shopping mall.
Despite the turnaround efforts, Macy’s sales have slumped, declining 7% year-over-year.
The retailer expressed optimism after its most recent quarter beat Wall Street’s expectations. By the numbers, that performance improvement was driven mostly by sales at brands that Macy’s Inc. owns, like Bloomingdale’s and Bluemercury, not the namesake Macy’s chain.
Macy’s has become an acquisition target as it grapples with sagging sales and competition not just from online upstarts, but also from brands that would rather sell their products directly to consumers than wholesale through a department store. Kohl’s faced a similar takeover bid in 2022 when it received multiple acquisition offers that it said undervalued its business.

Retailers across the board have faced headwinds this year as volatile interest rates and high inflation weigh on consumers’ wallets. However, consumer spending has proven particularly resilient in the online shopping sector.
Consumer spending was robust online during Black Friday and Cyber Monday but it’s still unclear how strong the holiday season will be after numerous retailers issued cautious fourth-quarter outlooks.
Arkhouse and Macy’s declined to comment. Brigade did not immediately respond to CNBC’s request for comment.
The Wall Street Journal first reported the buyout offer.
This is breaking news. Please check back for updates. More

Companies from Jo Malone London to Chinese education company New Oriental have turned to livestreaming sales as a way to stay connected with consumers in China and get them to spend money.
Use of virtual livestreaming hosts was a trend that stood out during this year’s Singles Day, said Xiaofeng Wang, principal analyst at Forrester.
Businesses are also combining ChatGPT-like artificial intelligence with livestreaming.

HAIAN, CHINA – NOVEMBER 7, 2023 – A crab farmer sells crabs via a live webcast at Xinhai village in Haian city, Jiangsu province, China, Nov 7, 2023. (Photo by Costfoto/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images

BEIJING — Livestream shopping is taking off in China, driving development of new tech products such as virtual human streamers and mobile data packages.
It’s an attempt to monetize — and innovate — in one of the few bright spots for an economy that’s largely slowing in growth.

Livestreaming e-commerce saw sales surge by 19% during the latest Singles Day shopping festival in November, while sales via traditional e-commerce dropped by 1%, according to McKinsey analysis.
Since the onset of the Covid-19 pandemic in early 2020, retailers in China have rushed to hire or develop in-house livestream hosts to sell products. Individuals, such as online influencer Austin Li, have become celebrities and overnight millionaires through using livestream commerce.
“Livestreaming, particularly livestreaming commerce, is something no country in the world has anything at the scale China has,” said Daniel Zipser, senior partner and leader of McKinsey’s Asia consumer and retail practice.
Now companies are testing out livestreaming hosts that are digitally created humans — either avatars that represent an actual human host, or a virtual human being created from scratch.

That use of virtual livestreaming hosts was a trend that stood out during this year’s Singles Day, said Xiaofeng Wang, principal analyst at Forrester.

“The quality has improved a lot this year, the virtual hosts look more real, at least the ones I’ve seen from Tencent, JD,” she said.
Wang added that using virtual livestreamers is a way for retailers to differentiate themselves from others, as well as reduce the cost of hiring a famous influencer, who might also carry the risk of being involved with celebrity scandals.

Livestreaming, particularly livestreaming commerce, is something no country in the world has anything at the scale China has.

Daniel Zipser
senior partner, McKinsey

Tencent has launched a product that only needs a three-minute video of a user along with 100 spoken sentences to build a virtual avatar.
The company also has a “Zen Video” platform that lets people create simple promotional videos with a virtual human spokesperson.
Some companies are also combining ChatGPT-like artificial intelligence with livestreaming.
Online retail giant JD.com said its Yanxi virtual anchor product — based on the company’s AI model — was used in livestreaming sessions for more than 4,000 brands during Singles Day this year. One virtual streamer broadcast for 28 hours straight, according to JD’s technology arm. 
Baidu, best known for its search engine and Ernie AI chatbot, got into online shopping this Singles Day with the first at-scale use of its virtual human livestreaming product “Huiboxing” on its “Youxuan” e-commerce platform. The company claims virtual humans ran 17,000 streams from Oct. 20 to Nov. 11.

During that time, electronics giant Suning saw virtual human livestreaming contribute more than 3 million yuan ($420,000) in gross merchandise value on a single day, according to Baidu. GMV measures sales over time.
The digital human livestreamers are currently free for merchants to use on Baidu’s e-commerce platform and are based on the large language model behind Ernie bot, said Wu Chenxia, head of Huiboxing, adding the product uses big data to create multiple livestreaming scripts in an instant.
Regulators have their eye on the sector.
OpenAI’s ChatGPT isn’t officially accessible in China. Baidu’s Ernie bot wasn’t available for widespread use until late August when Beijing gave the green light.

A path to 3D livestreaming?

Livestreaming success is also dependent on consistent video connection.
Potential buyers are almost always watching on their mobile phones, while sellers may try to livestream from the field where they are growing the produce.
Mobile service operators China Unicom and China Mobile have started to sell data packages geared toward livestreamers in parts of the country.
These packages splice the network so that livestreamers get priority service, similar to how an express lane on a highway may only allow buses to use it to avoid traffic, said Joe Wang of Huawei’s ICT department.

Read more about China from CNBC Pro

All that is based on having widespread 5G connectivity, which allows livestreamers to broadcast outdoors or simultaneously on multiple platforms, he said.
Looking ahead, 5.5G will theoretically increase download speeds by 10 times compared to 5G, and upload speeds by two to three times, Wang said. He expects 5.5G will reach consumers as early as 2025, while AI’s development is letting businesses quickly turn 2D images into 3D ones.
That means, Wang said, that 3D livestreaming may be a reality in about two years.

Why livestreaming is ‘not a hype’

In the meantime, even companies such as Quantasing that sell adult education courses have jumped on the bandwagon by hosting livestreaming e-commerce – generating GMV of 13.3 million yuan in August.
CEO Matt Li said Quantasing holds more than 10 livestreaming sessions at once, and uses technology to decide what types of products and resources to dedicate to each one in order to generate the most revenue.

As fast as it’s grown, livestreaming is subject to China’s stringent regulation on content.
Analysts have also pointed out that livestreaming sales are often impulse buys, leading to many product returns.
From Jo Malone London to Chinese education company New Oriental, companies have turned to livestreaming sales as a way to stay connected with consumers in China and get them to spend money.
Importantly, businesses are shifting from using influencers, known as KOLs in China, to in-house livestreamers, McKinsey’s Zipser said.
“It is a clear indication [livestreaming] is not a hype, but it is something that companies are embracing and putting resources behind and the result of that is something that is here to stay,” he said. More

The history of inflation in Russia is long and painful. Following the revolution of 1917 the country dealt with years of soaring prices, and then faced sustained price pressure in the early period of Josef Stalin’s rule. The end of the Soviet Union, the global financial crisis of 2007-09 and then Vladimir Putin’s first invasion of Ukraine in 2014 also brought trouble. Fast forward to late 2023, as the war in Ukraine nears its second anniversary, and Russian prices are once again accelerating—even as inflation eases elsewhere (see chart).image: The EconomistAccording to figures published on December 8th, inflation in November was 7.5%, year on year, up from 6.7% the month before. The central bank dealt with a spike in early 2022, soon after Russia invaded Ukraine for a second time. Now, though, officials worry that they may be losing control. At the bank’s last meeting they raised interest rates by two percentage points, twice what had been expected. At their next one on December 15th a similar increase is on the cards. Most forecasters nonetheless expect inflation to keep rising.Russia’s inflation of 2022 was caused by a weaker rouble. After Mr Putin began his invasion the currency fell by 25% against the dollar, raising the cost of imports. This time currency movements are playing a small role. In recent months the rouble has actually appreciated, in part because officials introduced capital controls. Inflation in prices of non-food consumer goods, many of which are imported, is in line with the pre-war average.Look closer at Mr Putin’s wartime economy, however, and it becomes clear that it is dangerously overheating. Inflation in the services sector, which includes everything from legal advice to restaurant meals, is exceptionally high. The cost of a night’s stay at Moscow’s Ritz-Carlton, now called the Carlton after its Western backers pulled out, has risen from around $225 before the invasion to $500. This suggests that the cause of inflation is home-grown.Many economists blame government outlays, which are soaring as Mr Putin tries to defeat Ukraine. In 2024 defence spending will almost double, to 6% of GDP—its highest since the collapse of the Soviet Union. Mindful of a forthcoming election, the government is also boosting welfare payments. Some families of soldiers killed in action are receiving payouts equivalent to three decades of average pay. Figures from Russia’s finance ministry suggest that fiscal stimulus is currently worth about 5% of GDP, a bigger boost than that implemented during the covid-19 pandemic.This, in turn, is raising the country’s growth rate. Real-time economic data published by Goldman Sachs, a bank, point to solid growth. JPMorgan Chase, another bank, has lifted its GDP forecast for 2023, from a 1% decline at the start of the year, to 1.8% in June and more recently to 3.3%. “Now we confidently say: it will be over 3%,” Mr Putin recently boasted. Predictions of a Russian economic collapse—made almost uniformly by Western economists and politicians at the start of the war in Ukraine—have proven thumpingly wrong.The problem is that the Russian economy cannot take such rapid growth. Since the beginning of 2022 its supply side has drastically shrunk. Thousands of workers, often highly educated, have fled the country. Foreign investors have withdrawn around $250bn-worth of direct investment, nearly half the pre-war stock.Red-hot demand is running up against this reduced supply, resulting in higher prices for raw materials, capital and labour. Unemployment, at less than 3%, is at its lowest on record, which is emboldening workers to ask for much higher wages. Nominal pay is growing by about 15% year on year. Companies are then passing on these higher costs to customers.Higher interest rates might eventually take a bite out of this demand, stopping inflation from rising more. An oil-price recovery and extra capital controls could boost the rouble, cutting the cost of imports. Yet all this is working against an immovable force: Mr Putin’s desire to win in Ukraine. With plenty of financial firepower, he has the potential to spend even bigger in future, portending faster inflation still. As on so many previous occasions, in Russia there are more important things than economic stability. ■ More

EU institutions have been hashing out proposals this week in an effort to come up with an agreement on how to regulate products like ChatGPT.
Germany, France and Italy have opposed directly regulating generative AI models, known as “foundation models.”

A photo taken on November 23, 2023 shows the logo of the ChatGPT application developed by US artificial intelligence research organization OpenAI on a smartphone screen (left) and the letters AI on a laptop screen in Frankfurt am Main, western Germany.
Kirill Kudryavtsev | Afp | Getty Images

The European Union on Friday agreed to landmark rules for artificial intelligence, in what’s likely to become the first major regulation governing the emerging technology in the western world.
Major EU institutions spent the week hashing out proposals in an effort to reach an agreement. Sticking points included how to regulate generative AI models, used to create tools like ChatGPT, and use of biometric identification tools, such as facial recognition and fingerprint scanning.

Germany, France and Italy have opposed directly regulating generative AI models, known as “foundation models,” instead favoring self-regulation from the companies behind them through government-introduced codes of conduct.
Their concern is that excessive regulation could stifle Europe’s ability to compete with Chinese and American tech leaders. Germany and France are home to some of Europe’s most promising AI startups, including DeepL and Mistral AI.
The EU AI Act is the first of its kind specifically targeting AI and follows years of European efforts to regulate the technology. The law traces its origins to 2021, when the European Commission first proposed a common regulatory and legal framework for AI.
The law divides AI into categories of risk from “unacceptable” — meaning technologies that must be banned — to high, medium and low-risk forms of AI.
Generative AI became a mainstream topic late last year following the public release of OpenAI’s ChatGPT. That appeared after the initial 2021 EU proposals and pushed lawmakers to rethink their approach.

ChatGPT and other generative AI tools like Stable Diffusion, Google’s Bard and Anthropic’s Claude blindsided AI experts and regulators with their ability to generate sophisticated and humanlike output from simple queries using vast quantities of data. They’ve sparked criticism due to concerns over the potential to displace jobs, generate discriminative language and infringe privacy.
WATCH: Generative AI can help speed up the hiring process for health-care industry More

The two most significant events for gold demand in 2023 were the collapse of Silicon Valley Bank and the Hamas attack on Israel, the WGC said, estimating that geopolitics added between 3% and 6% to gold’s performance over the year.
The WGC estimated that central bank demand added 10% or more to gold’s performance in 2023, and said even if 2024 does not reach the same heights, above-trend buying should still offer an extra boost to gold prices.
The yellow metal broke through $2,100 per ounce on Monday before moderating slightly, and spot prices were hovering at around $2,030 per ounce early Friday.

An employee puts gold bullions into a safe deposit box at Degussa shop in Singapore
Edgar Su | Reuters

Gold prices hit another record high this week after a roaring 2023, and a combination of geopolitical tensions and continued central bank buying should see demand remain resilient next year, according to the World Gold Council.
The yellow metal broke through $2,100 per ounce on Monday before moderating slightly, and spot prices were hovering at around $2,030 per ounce early Friday.

In its Gold Outlook 2024 report published Thursday, the World Gold Council noted that many economists now anticipate a “soft landing” in the U.S. — the Federal Reserve bringing inflation back to target without triggering a recession — which would be positive for the global economy.
The industry body (which represents gold mining companies) noted that historically, soft landing environments have “not been particularly attractive for gold, resulting in flat to slightly negative average returns.”
“That said, every cycle is different. This time around, heightened geopolitical tensions in a key election year for many major economies, combined with continued central bank buying could provide additional support for gold,” the WGC added.

Its strategists also noted that the likelihood of a soft landing is “by no means certain,” while a global recession is still not off the table.
“This should encourage many investors to hold effective hedges, such as gold, in their portfolios,” the WGC added.

The two most significant events for gold demand in 2023 were the collapse of Silicon Valley Bank and the Hamas attack on Israel, the WGC said, estimating that geopolitical events added between 3% and 6% to gold’s price over the year.
“And in a year with major elections taking place globally, including in the U.S., the EU, India, and Taiwan, investors’ need for portfolio hedges will likely be higher than normal,” the report said, looking ahead to 2024.
All eyes on the Fed
WGC Chief Market Strategist John Reade told CNBC on Thursday that gold prices would likely remain range-bound but choppy next year. He expects them to react to individual economic data points that inform the likely trajectory of Fed policy until the first interest rate cut is in the bag.
Markets are currently pricing the first 25-basis-point cut to the Fed funds rate as early as March next year, according to CME Group’s FedWatch tool.
However, although rate cuts are usually seen as good news for gold (as cash returns fall and savers look elsewhere for high-yielding investments), Reade highlighted that two factors could mean that “expected policy rate easing may be less sanguine for gold than it appears on the surface.”
Firstly, if inflation cools more quickly than rates — as it is largely expected to do — then real interest rates remain elevated. And secondly, lower-than-expected growth could hit gold consumer demand.

“I’m not saying interest rates have to go back to 0 to reignite the demand, but that combination I think of the first cut in the States and cuts elsewhere in other important economies, will I think change a bit of the sentiment towards gold,” Reade said.

Central bank buying to continue

One other supporting factor for the yellow metal looking ahead is further central-bank buying, according to the World Gold Council.
Central banks have been a major source of demand in the global gold market over the last couple of years and 2023 is likely to be a record year. The WGC expects this to continue in 2024.
Reade said the organization was surprised by the significant increase in central bank purchases in 2022 and that the pace of buying continued this year.

In its report, the WGC estimated that central bank demand added 10% or more to gold’s performance in 2023, and noted that even if 2024 does not reach the same heights, above-trend buying should still offer an extra boost to gold prices.
“Our expectations are that central bank purchases will continue next year on a net basis, and that’s pretty much the case since the global financial crisis,” Reade said.
“My own expectation is that central banks are very much going to be again, the sort of prominent story in the gold market in 2024, but I think that it would be optimistic of us to say that it’s going to be another record year or a record-matching year.” More