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On 30 April, the World Gold Council's Q1 2024 Global Gold Demand Trends Report showed that global gold demand, including over-the-counter transactions, reached 1,238 tonnes in Q1 2024, up 3% year-on-year, the strongest Q1 demand performance since 2016. Total global gold demand excluding OTC transactions fell 5% from the same period in 2023 to 1,102t. Jewellery consumption was 479t, down 2% y-o-y, but still above the average of 465t in Q1 over the past five years. Total bar and coin demand was 312.3t, up 3% y-o-y.
According to the report, the average price of gold in the first quarter hit a record high of US$2,070 an ounce due to continued gold purchases by global central banks and solid investment demand from the over-the-counter market, which was 10% higher than the same period last year and up 5% from the previous quarter. In addition, global central bank gold reserves increased by 290t in Q1, up 1% y-o-y, 69% above the five-year quarterly average and the highest Q1 figure since 2000.
The report shows that in 2024, the People's Bank of China will continue to buy gold. At the end of the first quarter, China's official gold reserves stood at 2,262t, up 27t from the previous quarter. Gold now accounts for 4.6% of China's total official foreign exchange reserves, the highest level in history.
Looking back at the development of the global gold industry:
- Global demand for gold
From the perspective of global gold consumption demand, the consumption of gold in mainland China fluctuated from 2015 to 2022. Gold demand in 2022 was the strongest growth in recent years, with global demand surging 18% to 4,740.7t, the fastest growth rate in recent years. Among them, the demand in the fourth quarter of 2022 increased significantly, which was the highest single-quarter demand in the past decade, thus contributing greatly to the high growth of demand in the whole year of 2022. In the first half of 2023, global gold demand reached a cumulative 2,460.1t.
The downstream demand for gold can be divided into gold jewelry, industrial applications, gold coins and gold bars, gold ETF investment demand and central bank reserves. According to statistics from the USGS, jewellery is the largest consumer market for gold, accounting for 47% of demand in 2022. This is followed by central bank reserves, accounting for 20%.
China and India are the world's two largest consumers of gold jewellery, each accounting for about 32% of global jewellery demand in 2022, as residents of both countries have a traditional need to buy gold during festivals, weddings and other occasions, and gold jewellery can meet the need for stored value.
Xiang Songzuo, an economist and president of the Shenzhen Greater Bay Area Financial Research Institute, said that there will be room for gold prices to rise in the future, and it may resume rising in the near future, or rise to $2,500 per ounce. The current global geopolitical environment is very uncertain, and there is also the issue of inflation, both of which will not be eliminated in the short term, so gold prices will continue to rise.
David Rosenberg, a well-known economist, said in a report that gold is expected to hit $3,000 an ounce, with a potential upside of 29% from the current price level. He said that 70% of the U.S. reserves are gold, and that China's central bank has huge room to approach the global gold reserve benchmark in the coming years.
Guojin Securities Research Report believes that it is expected that in 2024, under the condition of rising gold prices and relatively stable cost control, the performance of gold stocks will perform better, and the current market value of gold stocks does not reflect the expectation of more gold price increases, and there is a large space for "making up for the rise". In the longer term, gold prices are rising strongly and are expected to reach US$2,700 per ounce in 2025.
Note: This article is for content purposes only and does not constitute any investment advice.
Prospective Economist APP Information Group
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