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Rising investor gold demand offsets lower jewellery buying in Q3, says industry body
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Global Banking & Finance Review®
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By Polina Devitt
LONDON (Reuters) – Global gold demand excluding over-the-counter (OTC) trading was steady year-on-year at 1,176.5 metric tons in the third quarter as higher investment activity offset reduced jewellery consumption, the World Gold Council (WGC) said on Wednesday.
Spot gold prices are up 34% so far this year, heading for the highest annual growth since 1979, due to uncertainty surrounding next week’s U.S. presidential election, lower interest rates, geopolitical risks and portfolio diversification. Gold hit a record of $2,771.61 per ounce on Tuesday.
Resurgent professional flows combined with solid bar and coin investment will offset weaker consumer demand and slower central bank buying” for gold in 2024, the WGC, an industry body whose members are global gold miners, said in a quarterly report.
Total demand for gold, including opaque OTC trading, rose 5% to 1,313 tons, a record for a third quarter, the WGC said. It estimates the OTC flows – investment from institutional, high-net-worth investors and family offices – at 136.5 tons in July-September, up 97%.
Physically-backed gold exchange traded funds (ETFs) saw the first positive quarter since the first quarter of 2022 with inflows of 95 tons, while bar and coin investment fell 9%.
Gold jewellery consumption, the biggest category of physical demand, fell by 12% in the third quarter despite strong growth in major import market India, while global central banks, which actively bought gold in 2022-2023, reduced purchases by 49%.
On the supply side, mine production increased by 6% to reach a third-quarter record, and recycling rose by 11%.
Gold supply and demand by WGC*:
Q3’23 Q2’24 Q3’24 Q3
change
y/y (%)
Supply
Mine production 935.7 907.0 989.8 6
Net producer hedging 23.8 8.5 0.2 -99
Recycled gold 290.1 336.4 323.0 11
Total supply 1,249.6 1,251.9 1,313.0 5
Demand
Jewellery fabrication: 582.2 408.2 543.3 -7
– Jewellery consumption 520.0 390.9 458.6 -12
– Jewellery inventory 62.1 17.2 84.6 36
Technology: 77.3 80.2 83.0 7
– Electronics 63.3 66.9 69.0 9
– Other industrial 11.7 11.1 11.8 1
– Dentistry 2.3 2.3 2.2 -4
Investment: 156.8 266.1 364.1 132
– Total bar and coin: 295.9 273.2 269.4 -9
of which bars 207.7 198.4 198.4 -4
of which official coins 54.3 49.6 31.3 -42
of which medals 34.0 25.3 39.8 17
– ETFs/similar products -139.1 -7.1 94.6 –
Central banks, other inst. 363.9 202.2 186.2 -49
Gold demand 1,180.2 956.7 1,176.5 0
OTC and other 69.4 295.2 136.5 97
Total demand 1,249.6 1,251.9 1,313.0 5
LBMA gold price ($/oz) 1,928.5 2,338.2 2,474.3 28
*Source: ICE Benchmark Administration, Metals Focus, World Gold Council.
(Reporting by Polina Devitt; editing by Barbara Lewis)
Gold demand refers to the total quantity of gold purchased by consumers, investors, and central banks within a specific period. It includes jewelry, investment products, and industrial uses.
Exchange-traded funds (ETFs) are investment funds that are traded on stock exchanges, similar to stocks. They typically hold a diversified portfolio of assets and allow investors to buy shares in a fund that tracks an index.
Jewelry consumption refers to the total amount of gold used in the production of jewelry. It is a significant component of overall gold demand and can fluctuate based on consumer preferences and economic conditions.
Portfolio diversification is an investment strategy that involves spreading investments across various assets to reduce risk. By diversifying, investors can minimize the impact of poor performance in any single investment.
Central bank buying refers to the purchase of gold or other assets by a country's central bank as part of its monetary policy. This can influence gold prices and overall market stability.
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