Global gold demand rose 5% on a year-on-year basis during the September quarter powered by investment flows, the World Gold Council (WGC) said on Wednesday.
Total gold demand during the September quarter stood at 1,313 tons, which was a record for the third quarter of any year, WGC said in its Gold Demand Trends report.
In terms of value, demand rose to $100 billion for the first time, rising 35% from the corresponding period last year.
WGC said:
Geopolitical uncertainty, stemming from both an escalation in Middle East tensions and the highly polarised US presidential election, is supporting increased investment interest and lower-than-predicted recycling.
The Council said that the rise in gold price has broadened investors’ interest in the yellow metal amid increasing media attention on the “stellar” year-to-date returns.
“The shift that is underway in global interest rate policy should promote further interest in gold investment as the opportunity cost of owning gold drops,” WGC said.
Since the beginning of the year, gold prices on COMEX have risen more than 30%. On Tuesday, the most active contract on the exchange had touched a new record high of $2,801.65 per ounce fueled by uncertainty over the outcome of the US elections and rising geopolitical tensions.
Record gold prices drive jewellery volumes down
Jewellery consumption in the third quarter fell 12% on year to 459 tons as the gold price reached a series of successive new highs, imposing affordability constraints on consumers.
However, India’s consumption rose 10% on year to 171.6 tons during the reporting quarter after the government cut import duty on the yellow metal.
WGC noted:
The cut in India’s gold import duties in July sparked a revival in gold jewellery demand, which posted its strongest third quarter since 2015.
The duty cut offset much of the rise in gold prices as buyers seized the opportunity, which paved the way for early purchases for weddings scheduled for the upcoming months.
However, the sharp rise in gold prices have crippled China’s jewellery demand for the quarter. Demand fell as much as 33% from last year to 102.5 tons.
The September quarter was the weakest in terms of jewellery consumption in China since 2010. China and India are the top gold jewellery consuming countries in the world.
Gold investment demand doubled
Demand from gold investments more than doubled on a year-on-year basis to 364 tons, WGC said.
In the corresponding quarter last year, investment demand for gold was 156.8 tons.
“A sharp swing to notable inflows into global gold ETFs was a key driver of total gold demand in Q3, along with the continued presence of strong OTC (over-the-counter) investment,” WGC said.
Global gold exchange-traded funds saw inflows of 95 tons during the September quarter, halting their nine-quarter runs of outflows.
Overall gold bar and coin demand fell 9% on year to 269.4 tons due to weak consumption from China, Turkey and Europe.
However, India’s demand for gold bars and coins jumped to its highest third quarter since 2012, WGC said.
Mirroring jewellery demand, retail investment was strongest in the weeks initially following the duty cut before slowing in September as prices surged and the inauspicious Shradh period began.
Central bank demand for gold slowed
Gold buying by global central banks fell 49% on year to 186.2 tons during the September quarter.
However, purchases by global central banks were at 694 tons since the beginning of 2024. This is below the 2023 record, but is in line with the levels seen in 2022.
“Based on statements from some central banks, there are now clearer indications that the sharp increase in the gold price since March has indeed inhibited some buying, as well as encouraging some selling among banks that manage their gold reserves tactically,” WGC noted.
The National Bank of Poland was the largest buyer of gold as the central bank bought 42 tons of the yellow metal during the September quarter.
Additionally, gold used in the technology sector saw modest growth during the September quarter, rising 7% on year to 83 tons.
Gold demand in the electronics sector rose 9% on year to 69 tons, while other industrial uses were up 1% to 11.8 tons, according to the report.
Gold supply and production
Similar to demand, gold supply worldwide increased 5% on year during June-September to 1,313 tons.
Since the start of 2024, gold supply was up 3% on year at 3,762 tons, driven by 3% growth in mine production to a record level for the first three quarters of the year, WGC said.
Recycled gold volumes rose 11% on year to 323 tons during the September quarter. But, volumes in June-September fell 4% sequentially despite record high gold prices.
Global mine production of gold rose 6% on a year-on-year basis to 989.8 tons during the September quarter, the Council said.
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