Investment demand for paper gold is still lackluster as prices remain below $1,800 an ounce. However, physical demand for the precious metal remains strong as the British Royal Mint saw strong sales last week.

The mint cannot give precise sales numbers but said its 10-ounce gold bar had been its most popular product.

The mint's busiest day of 2021 was on May 14, as the gold price started a run back to $1,900 an ounce before it was hit with a wave of selling pressure during the summer.

It was also noted that demand and volatility in the gold market have picked up as investors continue to react to rising inflation pressures and monetary policy.

According to many analysts, while central banks worldwide, including the Bank of England, have planned to raise interest rates in 2022, they are expected to lag the inflation curve and keep real interest rates in negative territory.

In November, the UK government announced that the consumer price index had rose at an annual rate of 4.2% in October, making a sharp jump from the 3.1% increase in September. Inflation in the UK is now at its highest level in a decade.