The World Gold Council's latest report, released on July 30, 2024, reveals that global gold demand (including over-the-counter investment) reached 1,258 tonnes in the second quarter, up 4% year-on-year, marking the highest second-quarter total in the data series dating back to 2000. The surge was fueled by continued central bank purchases and OTC investments, despite a sharp decline in jewelry consumption.
Record Q2 Total Demand
Excluding OTC investment, Q2 gold demand fell 6% year-on-year to 929 tonnes, as jewelry demand dropped to its lowest in four years. However, when OTC is included, total demand posted a 4% increase. Global gold supply grew 4% to 1,258 tonnes, with mine production reaching a record 929 tonnes for a second quarter and recycling supply hitting its highest Q2 level since 2012, responding to the rising gold price.
The average gold price in Q2 was $2,338 per ounce, with a peak of $2,427 in May. The elevated price weighed heavily on jewelry demand, which fell 19% year-on-year to 391 tonnes—the lowest Q2 figure in four years.
Central Banks & Tech Drive Key Demand
Central bank net purchases rose 6% year-on-year to 184 tonnes, driven by portfolio protection and diversification needs. Emerging market central banks remained the primary buyers, while some advanced economies slowed their buying pace. The World Gold Council expects central bank demand to remain supportive.
Technology sector gold demand jumped 11% year-on-year, continuing to benefit from the AI boom that drives demand for semiconductors and electronic components. This marks the second consecutive quarter of double-digit growth in this segment.
ETF Outflows and Retail Weakness
Global gold ETFs saw net outflows of 7 tonnes in Q2, extending the previous quarter's trend. Retail bar and coin investment fell 5% to 261 tonnes, primarily due to weak demand from Western markets. However, demand from Eastern markets like China and India remained resilient, partially offsetting the weakness. The World Gold Council noted that high gold prices prompted profit-taking among some retail investors, while elevated interest rates dampened gold's appeal as a holding asset.
Looking ahead, the report suggests that the combination of central bank buying, geopolitical uncertainties, and potential Fed rate cuts could sustain gold demand in the second half of 2024, even as jewelry and retail investment face headwinds.