Gold demand hits record highs as investors seek safe haven amid uncertainty

The latest report from the World Gold Council (WGC) has confirmed record market support for the precious metal, with prices tipped to remain strong.

The World Gold Council (WGC) has reported record market support for gold in its latest Gold Demand Trends report.

Prices remained strong with an average of $3,766 per ounce in Q3.

Demand rose 5% year-on-year to 1,313t, with total demand exceeding $152 billion for the first time on record.

Global investment demand more than doubled year-on-year to 364t, driven by a shift in demand for gold exchange-traded funds (ETFs).

Gold ETFs added 95t globally in the first positive quarter since Q1 2022, while bar and coin demand fell 9%.

Compared to the 10-year average of 774t, the year-to-date total for bar and coin demand remained strong at 859t.

While central bank buying slowed, Q3 demand remained robust at 186t and year-to-date demand reached 694t.

High pricing was also associated with a slide in global demand for gold jewellery, which was down 12% year-on-year on a volume basis but up 13% in value terms.

WGC senior market analyst Louise Street said increased investment and over-the-counter activity propped up global gold demand and drove price performance in Q3.

“While the higher gold price dampened demand in the majority of consumer markets, the import duty cut in India kept jewellery and bar and coin demand remarkably high in a record-breaking price environment,” Ms Street said.

“A ‘FOMO factor’ among investors has been a key driver of increased demand this quarter.

“Investors, particularly in the US, are encouraged by the prospect of future interest rate decreases and are also considering gold’s role as a safe haven in the face of US political uncertainty and escalating conflicts in the Middle East.

“On the other hand, we’ve seen over 30 record price highs in 2024 and that environment will continue to be challenging for consumers.”

The WGC noted that total demand for gold in technology grew 7% year-on-year, bolstered by growth from the electronics sector as the artificial intelligence boom continues to support demand with total supply up 5% year-on-year.

Mine production was up 6% and recycling 11% higher.

In the Australian market, demand led to some interesting trends, according to WGC market strategist John Reade.

“Record-high local gold prices, which rallied higher in October, have continued to weigh on demand for gold jewellery in Australia, where tighter financial conditions have curtailed overall consumer spending,” Mr Reade said.

“However, like other western markets, Australia is showing increased allocations to gold in portfolios through bar and coin investment and ETFs as investors seek portfolio resilience.

“Continued central bank buying, escalated geopolitical uncertainty and increased investor focus are likely to stay supportive of gold.

“Add to this easing policy rates, which incentivise buying through lower holding costs, and we expect gold to remain a favoured hedge against instability and portfolio diversifier.”