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Environment|Gold|Technology
Environment|Gold|Technology
environment|gold|technology

Gold demand, including OTC investments, up 4% y/y in the second quarter

gold bars

Photo by Bloomberg

30th July 2024

By: Darren Parker

Creamer Media Senior Contributing Editor Online

     

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Gold demand, excluding over-the-counter (OTC) investments, decreased by 6% year-on-year to 929 t in the second quarter, as a significant decline in jewellery consumption overshadowed moderate gains in other sectors, the World Gold Council (WGC) revealed on July 30.

However, including OTC investments, total gold demand increased by 4% year-on-year to 1 258 t, marking the highest second quarter in the data series since 2000, the WGC said.

The record gold price environment negatively impacted on second-quarter jewellery consumption, with volumes having decreased by 19% year-on-year to a four-year low of 391 t. Central bank net gold purchases increased by 6% year-on-year to 184 t, driven by the need for portfolio protection and diversification.

The WGC noted that a minor 7 t decline in global gold exchange-traded fund (ETF) holdings in the second quarter contrasted favourably with the 21 t drop recorded in the second quarter of 2023. Initial outflows were followed by emerging inflows later in the quarter.

Retail bar and coin investment decreased by 5% to 261 t, mainly owing to weak demand from Western markets. Conversely, gold used in technology increased by 11% year-on-year, as the AI trend continued to drive demand in this sector, the WGC said.

The London Bullion Market Association gold price averaged a record $2 338/oz in the second quarter, 18% higher year-on-year and 13% higher quarter-on-quarter. Gold reached a new record of $2 427/oz in May.

OTC investment of 329 t was a significant component of second-quarter total gold demand. Together with continued central bank buying, this helped drive the gold price to a series of record highs during the quarter.

Total gold supply grew by 4% year-on-year to 1 258 t, the WGC noted, adding that mine production of 929 t set a record for a second quarter.

Recycling supply was also the highest for a second quarter since 2012, responding to the rising gold price.

Regional investment trends continued to diverge. Demand for bars, coins and ETFs was robust in the East, compared with a marked decline in the West. However, Western ETF investment flows have started to return in the third quarter.

The WGC said the 2024 full-year outlook suggests that revived Western investment flows may balance out weaker consumer demand and potentially slower central bank buying compared with 2023.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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