Total global gold demand increased 4 percent year-on-year to 1,258 tonnes, data showed on Tuesday, marking the strongest Q2 on record.
Moreover, total demand was supported by healthy over-the-counter (OTC) transactions, up 53 percent year-on-year at 329 tonnes, the World Gold Council’s Q2 2024 Gold Demand Trends report said.
Record high prices
Increased OTC demand, continued buying from central banks and a slowdown in ETF outflows drove record-high gold prices in Q2. The gold price averaged $2,338/oz, 18 percent higher year-on-year, reaching a record of $2,427/oz during the quarter.
Central banks and official institutions increased global gold holdings by 183 tonnes, slowing down from the previous quarter, but still reflecting a 6 percent increase year-on-year.
Read: UAE Central Bank’s gold holdings reach $5.54 billion by April end, up 12 percent year-on-year
A World Gold Council annual central bank survey confirmed that reserve managers believe gold allocations will continue to rise over the next 12 months, driven by the need for portfolio protection and diversification in a complex economic and geopolitical environment.
Diverging trends
Global gold investment remained resilient, marginally higher year-on-year at 254 tonnes, concealing divergent demand trends. Bar and coin investment decreased 5 percent to 261 tonnes in Q2, due to a sharp decline in demand for gold coins. Strong retail investment in Asia was counterbalanced by lower levels of net demand in Europe and North America, where profit-taking surged in some markets.
Meanwhile, global gold ETFs saw minor outflows of seven tonnes during the quarter. Asian growth continued, sizable European outflows in April turned into nascent inflows in May and June, and North American outflows slowed significantly compared to the previous quarter.
Record high prices drove down jewelry demand by 19 percent year-on-year in Q2, but H1 demand remains resilient compared to the same period last year, thanks to a stronger than expected first quarter.
AI boom fuels demand
In addition, demand for gold in technology continued to increase, jumping 11 percent year-on-year driven primarily by the AI boom in the electronics sector, which saw an increase of 14 percent year-on-year.
Total gold supply rose 4 percent year-on-year, with mine production increasing to 929 tonnes. Recycled gold volumes increased 4 percent compared to the same quarter in 2023, marking the highest second quarter since 2012.
“Recently, the rising and record-breaking gold price has made headlines, driven by strong demand from central banks and the OTC market which propped up demand globally. However, the record high international prices have impacted consumer demand with global bar and coin demand falling 5% year-on-year and jewelry tumbling down 19 percent,” said Andrew Naylor, Head of Middle East and Public Policy at the World Gold Council.
“The UAE wasn’t immune from the impact of the soaring gold price. Investment demand dropped down 5 percent – in line with international figures – and jewellery demand decreased by 13 percent year-on-year,” Naylor added.
“Looking ahead, economic conditions and investor sentiment will play crucial roles in shaping regional demand dynamics in the second half of 2024 and it is likely that the high price will remain a headwind for gold demand. On the other hand, global trends such as geopolitical instability and potential interest rate cuts could positively influence gold demand,” he added.
For more news on markets, click here.
