Gold demand surges 3% globally in January to March to 1,238 tonnes: Report

Gold global demand: Global gold demand experienced a modest increase of 3 per cent during the January-March period, reaching 1,238 tonnes, marking the strongest quarter since 2016, despite elevated prices, as per the latest report from the World Gold Council (WGC).

The report, titled 'Q1 2024 Gold Demand Trends', highlights that the total global gold demand, including over-the-counter purchases, grew by 3 per cent year-on-year to 1,238 tonnes. Over-the-counter transactions, characterised by direct dealings between parties, contrast with exchange trading conducted via formal exchanges.

Excluding over-the-counter transactions, demand dipped by 5 per cent to 1,102 tonnes in the January-March period compared to the same period in 2023.

The WGC attributes the uptick in gold prices to strong investment activity in the over-the-counter market, steady central bank acquisitions, and increased demand from Asian buyers. As a result, the average quarterly gold price surged to a record high of $2,070 per ounce, marking a 10 per cent year-on-year and 5 per cent quarter-on-quarter increase.

Central banks globally continued their steady gold acquisitions, adding 290 tonnes to official holdings during the quarter. The report underlines that such consistent and substantial purchases underscore gold's significance in international reserve portfolios, particularly amid market volatility and heightened risk.

Investment demand

In terms of investment demand, bar and coin investments saw a 3 per cent year-on-year increase, maintaining stability compared to Q4 2023 levels at 312 tonnes. However, gold exchange-traded funds (ETFs) witnessed outflows, with global holdings declining by 114 tonnes, primarily driven by North American and European funds, partially offset by inflows into Asian-listed products.

Renewed investor interest in gold was notably observed in China, attributed to a weakening local currency and underperforming domestic equity markets.

Jewellery demand for gold remained resilient despite record-high prices, experiencing only a 2 per cent year-on-year decline. Strong demand in Asia offset decreases in Europe and North America.

Additionally, gold demand in the technology sector rebounded by 10 per cent year-on-year, fueled by the artificial intelligence boom in the electronics industry.

Mine production rises

On the supply side, mine production surged by 4 per cent year-on-year to 893 tonnes, marking a record first quarter. Recycling also reached its highest level since Q3 2020, increasing by 12 per cent year-on-year to 351 tonnes, as some investors seized the opportunity to capitalise on high prices.

Louise Street, Senior Markets Analyst at the World Gold Council, remarked on the recent surge in gold prices despite prevailing challenges such as a strong US dollar and prolonged higher interest rates. She attributed the surge to heightened geopolitical risks and ongoing macroeconomic uncertainties, driving safe-haven demand for gold.

Street also highlighted shifting investment trends between Eastern and Western markets, noting a reversal in roles in response to price movements. Looking ahead, she anticipates a robust performance for gold in 2024, exceeding initial expectations, driven by factors such as potential market stabilisation and continued demand for gold as a safe-haven asset amidst evolving economic conditions.

(With Reuters inputs)