Global gold demand remains robust in Q1 2024; investment demand in India, China grows amid surge in price: WGC report

Gold demand, Gold prices India: The love for gold remained strong around the globe during the quarter gone by, according to the latest report by the World Gold Council. The report 'Gold Demand Trends' showed that total global gold demand (inclusive of OTC purchases) was up 3 per cent year-on-year (YoY) to 1,238 tonne, marking the strongest first quarter since 2016. OTC stands for over-the-counter. 

There are two primary forms of gold trading in the wholesale market: over-the-counter (OTC) and via exchange. OTC markets are characterised by market participants trading directly with each other. 

However, demand excluding OTC fell 5 per cent to 1,102 tonne in Q1 compared to the same period in 2023.

Healthy investment from the OTC market, persistent central bank buying, and higher demand from Asian buyers helped drive the gold price to a record quarterly average of US$2,070/oz—10 per cent higher YoY and 5 per cent higher QoQ.

Further, gold bar and coin investment also increased 3 per cent YoY, remaining steady at the same levels as in Q4 2023 at 312t, the report added.

Meanwhile, gold ETFs continued to see outflows, with global holdings falling by 114t, led by North American and European funds but slightly offset by inflows into Asian-listed products. "China generated the bulk of that increase, with renewed investor interest in gold due to the weakening local currency and poorly performing domestic equity markets," the report added. 

Global jewellery demand remained resilient despite record-high prices, only falling 2 per cent YoY. Demand in Asia countered decreases in both Europe and North America.

In addition, demand for gold in technology recovered 10% year-on-year, driven by the AI boom in the electronics sector.

Commenting on the latest trend, Louise Street, Senior Markets Analyst at the World Gold Council, commented: “Since March, the gold price has climbed to all-time highs, despite traditional headwinds of a strong US dollar and interest rates that are proving to be ‘higher for longer."

“Interestingly, we are witnessing shifting behaviour trends from Eastern and Western investors. Typically, investors in Eastern markets are more responsive to the price, waiting for a dip to buy. In contrast, Western investors have historically been attracted to a rising price, tending to buy into the rally. In Q1, we saw those roles reversed, with investment demand in markets such as China and India growing considerably as the gold price surged.

Street added, "2024 is likely to produce a much stronger return for gold than we anticipated at the beginning of the year, based on its recent performance."