Global demand for gold began the year in decline, with the price of the yellow metal at record levels, weighing in particular on jewelry purchases.
From January to March 2024, demand for the precious metal stood at 1,102 tonnes, down 5% year-on-year, according to the quarterly report of the World Gold Council (WGC) published on Tuesday. Demand for jewelry, the largest segment of gold demand, stood at 479 tonnes from January to March 2024, down 2% year-on-year, under pressure due to extremely high gold prices.
The relative stability of gold over the first two months of the year initially encouraged jewelry purchases, particularly in the run-up to the Chinese New Year, a period of high demand. “However, demand collapsed in March as the price of gold exploded,” the CMO noted in its report. Since the start of the year, the price of gold has increased by more than 13%.
Traditional safe haven
The price soared at the end of February, galvanized by expectations of a drop in American interest rates which made the dollar less attractive. By comparison, the precious metal is becoming more attractive to investors. Geopolitical tensions also contribute to the appetite for the yellow metal, a traditional safe haven.
On the financial side, sales of ETFs – listed securities backed by physical gold assets – caused total financial investment in gold to fall by 28% in the first quarter of 2024, to 198.6 tonnes. Physical investment in coins and bars increased slightly (+3%) but not enough to offset ETF sales, largely motivated according to the CMO by profit-taking given the high gold prices.
Gold purchases by central banks were maintained, totaling 289.7 tonnes for the first three months of the year. Finally, demand for gold in the technology sector – the yellow metal found in the components of many electronic devices – climbed 10% in the first quarter compared to the same period last year, reaching 78.6 tonnes. A progression that the CMO attributes to the rise of artificial intelligence. The technology sector, however, remains only a minimal part of total demand.
