Gold Demand Surges in Q2, Central Banks and Technology Sector Driving Growth, World Gold Council Reports
The latest report from the World Gold Council reveals a significant increase in gold demand during Q2 2024, reaching the highest level for that quarter since records began in 2000. This surge in demand is primarily attributed to central bank purchases and investments in the over-the-counter (OTC) market, with central bank gold buying rising by 6% and demand from the technology sector increasing by 11%.
While gold demand, excluding OTC investments, saw a decline of 6% year-on-year to 929 tonnes due to a sharp drop in jewelry consumption, when OTC investments are factored in, total gold demand actually rose by 4% to 1,258 tonnes, marking the highest Q2 demand in the World Gold Council’s data series. The report highlights the role played by central banks in driving this increase, as their net gold buying grew by 6% to 184 tonnes, driven by the need for portfolio protection and diversification.
Jewelry demand, however, experienced a significant decline of 19% compared to the previous year, reaching a four-year low of 391 tonnes. This drop is largely attributed to record-high gold prices, which averaged $2,338 per ounce in Q2 and peaked at $2,427 per ounce in May.
In terms of supply, total gold supply increased by 4% to 1,258 tonnes, with mine production of 929 tonnes setting a record for a second quarter. Recycling supply also reached its highest level for a second quarter since 2012, responding to the rising gold price.
The report also highlights a decline of 7 tonnes in global gold exchange-traded fund (ETF) holdings during Q2, as well as a 5% decrease in retail bar and coin investment to 261 tonnes, primarily due to weak demand from Western markets. However, the technology sector experienced a notable jump of 11% in gold usage, driven by the ongoing trend of artificial intelligence, which continues to fuel demand in this industry.