Global demand for gold rose 5% year-on-year to 1,313 tonnes in the three months to September 2024, marking a record third quarter, as investors sought the precious metal for stability amid rising economic and geopolitical uncertainties, according to a new report. Total demand during the quarter exceeded US$100 billion for the first time, another historic high.
Asia played a significant role in this surge, with demand across Asean economies like Thailand, Indonesia, and Malaysia recording double-digit growth, the World Gold Council (WGC) says in its Q3 2024 Gold Demand Trends report.
“Central banks worldwide maintained healthy demand for gold, solidifying its reputation as a vital asset for risk management and portfolio diversification in times of economic and geopolitical uncertainties. Singapore also mirrored this trend, with institutions actively leveraging gold as a strategic asset to strengthen their portfolios,” shares Shaokai Fan, head of Asia-Pacific (ex-China) and global head of central banks at the WGC.
Compared with the previous quarter, central bank buying was more subdued in Q3, but the year-to-date total remains strong, on a rolling four-quarter basis, with net buying of 909 tonnes well above longer-term average levels.
The Reserve Bank of India maintained its buying streak, adding gold to its reserves in every month during the quarter. It bought a total of 13 tonnes in Q3, marginally lower than the 18 tonnes it purchased in both Q1 and Q2. Its gold reserves have now risen to 854 tonnes, 6% higher than at the end of 2023.
Fomo factor spurs buying
However, based on statements from some central banks, there are now clearer indications that the sharp increase in the gold price since March has inhibited some buying, while encouraging some selling among banks that manage their gold reserves tactically, the WGC says.
Globally, investment in gold more than doubled year-on-year to 364 tonnes, with exchange-traded funds (ETFs) seeing net inflows of 95 tonnes, a stark reversal after nine consecutive quarters of outflows.
This trend reflects heightened confidence in gold’s role as a safe haven, especially amid expectations of interest rate cuts in Western economies. While physical bar and coin investments experienced a slight dip, demand in Asia remained resilient as regional investors adapted to high-price conditions.
Louise Street, senior markets analyst at the WGC, comments: “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.”
“A Fomo (fear of missing out) factor among investors has been a key driver of increased demand this quarter. Investors have also shown an appetite to buy into the price momentum, 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,” Street adds.
