Global Gold Demand Stays Strong, Supporting Record-High Prices: World Gold Council

The World Gold Council’s Q1 2024 Gold Demand Trends report reveals that total global gold demand (inclusive of OTC purchases) was up 3% year-on-year to 1,238 tonnes, marking the strongest first quarter since 2016. Demand excluding OTC fell 5% to 1,102 tonnes in Q1 compared to the same period in 2023.

Healthy investment from the OTC market (also referred to as ‘off exchange’ trading which takes place directly between two parties, unlike exchange trading which is conducted via an exchange), persistent central bank buying, and higher demand from Asian buyers, helped drive the gold price to a record quarterly average of US$2,070/oz—10% higher year-on-year and 5% higher quarter-on-quarter.

Central banks continued to buy gold apace, adding 290 tonnes to official global holdings during the quarter. Consistent and substantial purchases by the official sector highlight gold’s importance in international reserve portfolios amidst market volatility and increased risk.

Turning to investment demand, bar and coin investment increased 3% year-on-year, remaining steady at the same levels from Q4 2023 at 312 tonnes.

Gold ETFs continued to see outflows with global holdings falling by 114 tonnes, led by North American and European funds but slightly offset by inflows into Asian-listed products. China generated the bulk of that increase, with renewed investor interest in gold due to the weakening local currency and poorly performing domestic equity markets.

Global jewellery demand remained resilient, despite record-high prices, only falling 2% year-on-year. Demand in Asia countered decreases in both Europe and North America.

In addition, demand for gold in technology recovered 10% year-on-year driven by the AI boom in the electronics sector.

On the supply side, mine production increased 4% year-on-year to 893 tonnes – a record first quarter. Recycling also reached the highest level since Q3 2020, jumping 12% year-on-year to 351 tonnes, as some investors saw the high price as an opportunity to take profits.

Louise Street, Senior Markets Analyst at the World Gold Council, commented: “Since March, the gold price has climbed to all-time highs, despite traditional headwinds of a strong US dollar and interest rates that are proving to be ‘higher for longer’.

“A number of factors are behind the recent surge including heightened geopolitical risk and ongoing macroeconomic uncertainty driving safe-haven demand for gold. In addition, the continued and resolute demand from central banks, strong OTC investment and increased net buying in the derivatives market, have all contributed to the higher price of gold.

“Interestingly, we are witnessing shifting behaviour trends from Eastern and Western investors. Typically, investors in Eastern markets are more responsive to the price, waiting for a dip to buy, whereas Western investors have historically been attracted to a rising price, tending to buy into the rally. In Q1, we saw those roles reversed with investment demand in markets such as China and India growing considerably as the gold price surged.

“Looking ahead, 2024 is likely to produce a much stronger return for gold than we anticipated at the beginning of the year, based on its recent performance. Should the price level off in the coming months, some price-sensitive buyers may re-enter the market and investors will continue to look to gold for a safe haven asset as they seek clarity around rate cuts and election results.”

India Demand Statistics for Q1 2024 (January – March)

• Demand for gold in India for Q1 2024 was at 136.6 tonnes, up by 8% as compared to overall Q1 demand for 2023 (126.3 tonnes)
• India’s Q1 2024 gold demand value was Rs. 75,470 crores, up by 20% as compared to Q1 2023 (Rs 63,090 crores)
• Total Jewellery demand in India for Q1 2024 increased by 4% at 95.5 tonnes as compared to Q1 2023 (91.9 tonnes)
• The value of jewellery demand was Rs. 52,750 crores, up by 15% from Q1 2023 (Rs. 45,890 crores)
• Total Investment demand for Q1 2024 at 41.1 tonnes increased by 19% in comparison to Q1 2023 (34.4 tonnes)
• In value terms, gold Investment demand in Q1 2024 was Rs. 22,720 crores, up by 32% from Q1 2023 (Rs. 17,200 crores)
• Total gold recycled in India in Q1 2024 was 38.3 tonnes, up by 10% compared to 34.8 tonnes in Q1 2023
• Total gold imports in India in Q1 2024 was 179.4 tonnes, up by 25% compared to 143.4 tonnes in Q1 2023
• US$/oz average quarterly price in Q1 2024 was US$ 2,069.8 in comparison to US$ 1,889.9 in Q1 2023
• INR/10g average quarterly price in Q1 2024 was INR 55,247.20 in comparison to INR 49,943.80 in Q1 2023 (without import duty and GST)

Sachin Jain, Regional CEO, India, World Gold Council said: “In Q1’24, India’s total gold demand was 136.7 tonnes, up by 8% in comparison to 126.3 tonnes in Q1 2023 reaffirming Indians enduring relationship with gold. Gold jewellery demand was 95 tonnes, 4% above the comparatively weak Q1’23. India’s continued strong macroeconomic environment was supportive for gold jewellery consumption even though prices reached a historic high in March leading to a slowdown in sales as the quarter ended.

“Q1’24 also saw healthy levels of gold bar and coin demand in India, up 19% y/y at 41 tonnes. This was on a par with Q1’22, which was itself the strongest first quarter since 2014. The price correction in February sparked investors interest, with anticipation of a rebound driving purchases. As the price rallied to successive record highs, investors remained bullish, contributing to the robust demand. Investments into gold ETF’s too saw positive inflows of over 2 tonnes. The Reserve Bank of India also grew its gold reserves by 19 tonnes during Q1, exceeding last year’s annual net purchases of 16 tonnes.

“Although Indian recycling volumes increased by 10% to 38.3 tonnes in Q1’24, there were very few reports of distress selling. With a strong economy and expectations of a normal-to-good monsoon, there seems little desire to cash in on high gold prices at the moment.

“As we look forward, while the current high gold prices may temporarily put strain on demand, strong cultural and seasonal factors such as festivals, weddings helped by an expectation for a better monsoon and solid economic growth would support demand. Our full year gold demand forecast for India is between 700-800 tonnes, if price rally continues it could be lower end of this range.”