SAYS INDUSTRY BODY: Rising investor gold demand offsets lower jewelry buying

By Polina Devitt

LONDON- Global gold demand excluding over-the-counter (OTC) trading was steady year-on-year at 1,176.5 metric tons in the third quarter as higher investment activity offset reduced jewelry consumption, the World Gold Council (WGC) said on Wednesday.

Spot gold prices are up 34 percent so far this year, heading for the highest annual growth since 1979, due to uncertainty surrounding next week’s US presidential election, lower interest rates, geopolitical risks and portfolio diversification. Gold hit a record of $2,771.61 per ounce on Tuesday.

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“Resurgent professional flows combined with solid bar and coin investment will offset weaker consumer demand and slower central bank buying” for gold in 2024, the WGC, an industry body whose members are global gold miners, said in a quarterly report.

Total demand for gold, including opaque OTC trading, rose 5 percent to 1,313 tons, a record for a third quarter, the WGC said. It estimates the OTC flows – investment from institutional, high-net-worth investors and family offices – at 136.5 tons in July-September, up 97 percent.

Physically-backed gold exchange traded funds (ETFs) saw the first positive quarter since the first quarter of 2022 with inflows of 95 tons, while bar and coin investment fell 9 percent.

Gold jewelry consumption, the biggest category of physical demand, fell by 12 percent in the third quarter despite strong growth in major import market India, while global central banks, which actively bought gold in 2022-2023, reduced purchases by 49 percent.

On the supply side, mine production increased by 6 percent to reach a third-quarter record, and recycling rose by 11 percent. 

 India’s gold demand in 2024 is likely to fall to its lowest in four years as a rally in prices to a record high is seen denting purchases during the peak festival season in the December quarter, the World Gold Council (WGC) also said.

Gold demand in the world’s second-biggest consumer of the precious metal could stand between 700 and 750 metric tons in 2024, the lowest since 2020 and down from last year’s 761 tons, Sachin Jain, CEO of WGC’s Indian operations, told Reuters.

Demand for the precious metal usually spikes towards the end of the year in India, as buying gold for weddings and major festivals such as Diwali and Dussehra is considered auspicious. – Reuters

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