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.