Fri, 20 September 2024 03:39:41am
Related Tags: Gold prices 2024, Central bank gold buying, OTC gold investment, Gold demand trends, Gold market analysis 2024
Gold Demand Trends 2024 - Record Prices Surge as Central Banks and Investors Drive Demand
Gold Demand Trends 2024 - Record Prices Surge as Central Banks and Investors Drive Demand
As gold prices soar to unprecedented heights, the global market is experiencing a significant shift in demand dynamics. The second quarter of 2024 witnessed a remarkable surge in gold prices, reaching an all-time high of $2,427 per ounce in May. This surge has been driven by robust investment activities, particularly from over-the-counter (OTC) investments and central banks seeking portfolio protection and diversification.
Gold demand, excluding OTC investments, saw a 6% year-on-year decline, totaling 929 tonnes. This decrease was primarily due to a sharp drop in jewelry consumption, which plummeted by 19% to a four-year low of 391 tonnes. Despite this, the inclusion of OTC investments painted a different picture, showing a 4% year-on-year increase in total gold demand, amounting to 1,258 tonnes – the highest Q2 demand recorded since 2000.
Key Highlights:
Record Gold Prices: The average LBMA (PM) gold price hit a record $2,338 per ounce in Q2, marking an 18% year-on-year increase and a 13% rise quarter-on-quarter. The peak price of $2,427 per ounce in May set a new benchmark in the gold market.
OTC and Central Bank Investment: OTC investments were a significant driver of gold demand, contributing 329 tonnes in Q2. Central bank net gold buying also increased by 6% year-on-year to 184 tonnes, reinforcing the need for portfolio protection and diversification amidst economic uncertainties.
Jewelry Consumption Decline: The high gold prices took a toll on jewelry demand, which saw a significant 19% drop year-on-year, reducing the volume to a four-year low of 391 tonnes.
ETF and Retail Investment Trends: There was a minor 7-tonne decline in global gold ETF holdings in Q2, which is an improvement compared to the 21-tonne drop in Q2 2023. Retail bar and coin investment fell by 5% to 261 tonnes, primarily due to weaker demand from Western markets.
Technological Demand Surge: The technology sector saw an 11% year-on-year increase in gold usage, driven by the ongoing AI trend and advancements in electronics.
Supply Dynamics:
Total gold supply grew by 4% year-on-year to 1,258 tonnes in Q2. Mine production reached a record 929 tonnes for a second quarter, while recycling supply also saw a significant increase, responding to the rising gold prices. This growth in supply has helped balance the heightened demand and maintain market stability.
Regional Investment Trends:
Investment trends have diverged significantly across regions. Demand for bars, coins, and ETFs remained strong in Eastern markets, while Western markets experienced a marked decline. However, there are early signs of Western ETF investment flows returning in Q3, potentially balancing out the weaker consumer demand and slower central bank buying anticipated for the rest of 2024.
Outlook for Year 2024:
The full-year outlook for 2024 suggests that revived Western investment flows may offset weaker consumer demand and potentially slower central bank buying compared to 2023. As the global economic landscape continues to evolve, gold remains a pivotal asset for investors and central banks alike, driving demand and influencing market trends.
