Value of gold demand rockets with price

ETF and OTC investment flows buoy total demand

Total gold demand (inclusive of OTC investment) gained 5% y/y to 1,313t – a record for a third quarter. This strength was reflected in the gold price, which reached a series of new record highs during the quarter. The value of demand jumped 35% y/y to exceed US$100bn for the first time ever.

Global gold ETF inflows (95t) were a major driver of growth; Q3 was the first positive quarter since Q1’22, with a y/y swing from hefty (-139t) Q3’23 outflows.

Bar and coin investment (269t) was down 9% y/y, from a relatively strong Q3’23. Much of the decline was specific to two or three key markets, counterbalanced by a very strong quarter in India.

Gold jewellery consumption (459t) sank 12% y/y despite strong growth in India. Although consumers bought reduced quantities, their spend on gold jewellery increased: the value of demand jumped 13% y/y to more than US$36bn.

The pace of central bank buying (186t) slowed in Q3, but y-t-d buying is in line with 2022 and remains widespread.

AI continued to support the use of gold in technology (83t); it grew 7% y/y albeit from a fairly low base and the outlook remains cautious.

Highlights

The LBMA (PM) gold price continued to breach successive record highs during Q3. The average price for the quarter was 28% higher y/y at a record US$2,474/oz.

OTC investment almost doubled y/y to 137t. This was the seventh consecutive quarter in which OTC investment has been positive for gold demand and remains a notable component of the market.

Total gold supply grew by 5% y/y to a record 1,313t. Mine production grew 6% y/y to another quarterly record and y-t-d output has eclipsed the 2018 prior high. Recycled gold volumes rose 11% y/y, but widespread distress selling is not yet in evidence.

Investment flows were key to gold’s performance in Q3. Falling interest rates, geopolitical uncertainty, portfolio diversification and momentum buying were among the key drivers.

2024 full year outlook: resurgent professional flows combined with solid bar and coin investment will offset weaker consumer demand and slower central bank buying.

 

Chart 1: Gold price surge lifts demand value above US$100bn

Quarterly total gold demand by sector, tonnes and value*

Chart 1: Gold price surge lifts demand value above US$100bn

Chart 1: Gold price surge lifts demand value above US$100bn
Quarterly total gold demand by sector, tonnes and value*
*Data as of 30 September 2024. Source: ICE Benchmark Administration, Metals Focus, World Gold Council

Sources: ICE Benchmark Administration, Metals Focus, World Gold Council; Disclaimer

*Data as of 30 September 2024.

Gold supply and demand

Table 1: Gold supply and demand by sector, tonnes

  Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 y/y % change
Supply
Mine production 935.7 955.0 871.6 907.0 989.8 6
Net producer hedging 23.8 19.9 -24.8 8.5 0.2 -99
Recycled gold 290.1 313.5 350.2 336.4 323.0 11
Total Supply 1,249.6 1,288.3 1,197.0 1,251.9 1,313.0 5
 
Demand
Jewellery fabrication 582.2 583.3 536.4 408.2 543.3 -7
Jewellery consumption 520.0 623.4 478.8 390.9 458.6 -12
Jewellery inventory 62.1 -40.1 57.7 17.2 84.6 36
Technology 77.3 82.2 80.5 80.2 83.0 7
Electronics 63.3 67.6 66.3 66.9 69.0 9
Other Industrial 11.7 12.3 11.9 11.1 11.8 1
Dentistry 2.3 2.3 2.3 2.3 2.2 -4
Investment 156.8 259.6 203.7 266.1 364.1 132
Total bar and coin 295.9 315.0 316.7 273.2 269.4 -9
Bars 207.7 222.9 226.2 198.4 198.4 -4
Official coins 54.3 60.3 66.0 49.6 31.3 -42
Medals/Imitation coins 34.0 31.9 24.5 25.3 39.8 17
ETFs & similar products -139.1 -55.4 -113.0 -7.1 94.6 - -
Central banks & other inst. 363.9 215.6 305.2 202.2 186.2 -49
Gold demand 1,180.2 1,140.7 1,125.8 956.7 1,176.5 0
OTC and other 69.4 147.6 71.2 295.2 136.5 97
Total Demand 1,249.6 1,288.3 1,197.0 1,251.9 1,313.0 5
LBMA Gold Price (US$/oz) 1,928.5 1,971.5 2,069.8 2,338.2 2,474.3 28

Source: ICE Benchmark Administration, Metals Focus, World Gold Council

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