Gold Demand Trends Q3 2024: Record Prices and Shifting Dynamics
The third quarter of 2024 witnessed significant developments in the global gold market, characterized by record prices and a notable shift in demand dynamics across various sectors. Total gold demand rose by 5% year-on-year (y/y) to 1,313 tonnes (t), reaching an all-time high for a third quarter. This was accompanied by a 35% increase in the value of gold demand, exceeding $100 billion for the first time ever.
Key Demand Drivers
1. Investment Demand
- The most significant surge was seen in investment demand, which more than doubled year-over-year to 364t, driven primarily by inflows into gold-backed ETFs and over-the-counter (OTC) investment.
- Western ETF inflows contributed 95t, marking the first positive quarter since Q1 2022, reversing the outflows seen in Q3 2023.
- Despite the uptick in ETF demand, bar and coin investment fell by 9% y/y to 269t, mainly due to declines in China and Turkey, although India experienced a strong quarter.
2. Jewellery Demand
- Gold jewellery demand fell by 12% y/y to 459t, attributed to record-breaking gold prices that imposed affordability constraints on consumers. Despite lower volumes, the value of gold jewellery demand rose by 13% y/y to over $36 billion due to higher prices.
- India was the exception, with jewellery demand increasing by 10% y/y, driven by a reduction in gold import duties, which encouraged buying at lower prices.
3. Central Bank Demand
- Central bank purchases slowed to 186t in Q3, down 49% y/y. However, the year-to-date total of 694t remained strong and was in line with the same period in 2022. The National Bank of Poland emerged as the largest buyer, adding 42t to its reserves.
4. Technology Demand:
- Demand for gold in technology grew by 7% y/y to 83t, driven mainly by the electronics sector, which rose by 9% y/y to 69t. The ongoing adoption of AI and advancements in electronics continued to fuel demand for gold in this sector.
Supply Trends
Total gold supply increased by 5% y/y to 1,313t, driven by record mine production and increased recycling.
1. Mine Production
- Mine production hit an all-time third-quarter high of 990t, a 6% increase y/y. Countries such as Canada, Mexico, Indonesia, and Russia contributed significantly to the rise in output.
2. Recycling
- Recycled gold volumes rose by 11% y/y to 323t, largely influenced by record-high gold prices, prompting more recycling activities across all regions.
Outlook for Q4 2024
Looking ahead, several factors are likely to shape the gold market:
- Continued High Prices
With gold prices at record levels, investment demand is expected to remain strong, particularly as geopolitical tensions and shifting interest rate policies support safe-haven buying.
- Central Bank Purchases
While central bank demand may fall short of the record levels seen in previous years, it is expected to remain positive as banks continue to diversify their reserves with gold.
- Jewellery Demand
High prices will likely continue to challenge jewellery demand, although seasonal factors like the upcoming Chinese New Year may provide some support in Q4.
Takeaways
Q3 2024 highlighted the resilience of the gold market amidst record prices, geopolitical uncertainty, and shifting economic landscapes. As gold continues to be a preferred asset for investors, central banks, and consumers, it remains a critical component in global financial markets. The performance in Q4 will be closely watched, especially in the context of economic developments, interest rate decisions, and geopolitical risks.
