Gold supply and demand
On the supply side, total global gold supply increased by 31.9t y-o-y in Q1 2024, up 2.64% y-o-y. Net producer hedging fell by 44.9t y-o-y, the largest decline since Q2 2020, global recycled gold increased by 38.9t, up 12.47% y-o-y, and mine production increased by 37.9t, up 4.43% y-o-y, ending two consecutive quarters of negative y-o-y.
On the demand side, global gold demand (excluding OTC and others) fell by 61.83t y-o-y in Q1 2024, narrowing the decline quarter-on-quarter. The decline in gold demand was mainly due to the year-on-year decline in demand for gold-backed ETFs, with jewellery demand, bar demand and central bank gold purchases all rebounding year-on-year over the same period. OTC and other items often include physical holdings of high-net-worth clients and financial institutions other than gold-backed ETFs, which was the largest contributor to the year-on-year increase in total global gold demand in Q1 and has increased significantly year-on-year for three consecutive quarters.
Regionally, excluding central bank purchases, demand in Asia Pacific and the Americas grew year-on-year in Q1, with the decline mainly driven by Europe.
1. Global gold supply On the supply side, the total global gold supply in the first quarter of 2024 increased by 31.9 tons year-on-year, an increase of 2.64% year-on-year. Net producer hedging fell by 44.9t y-o-y, the largest decline since Q2 2020, global recycled gold increased by 38.9t, up 12.47% y-o-y, and mine production increased by 37.9t, up 4.43% y-o-y, ending two consecutive quarters of negative y-o-y.
2. Global gold demand Global gold demand (excluding OTC and others) in the first quarter of 2024 decreased by 61.83 tonnes year-on-year, narrowing the decline quarter-on-quarter. The decline in gold demand was mainly due to the year-on-year decline in demand for gold-backed ETFs, with jewellery demand, bar demand and central bank gold purchases all rebounding year-on-year over the same period. OTC and other items often include physical holdings of high-net-worth clients and financial institutions other than gold-backed ETFs, which was the largest contributor to the year-on-year increase in total global gold demand in Q1 and has increased significantly year-on-year for three consecutive quarters. In terms of demand for gold ETFs, it was mainly the Asia-Pacific region that increased their holdings of gold ETFs before March. After March, gold-backed ETFs saw an increase in inflows. Gold broke through in the week of March 8, and Europe bought a small gold ETF of $400 million in the week of March 8, when there was a net outflow of gold ETFs in North America, and North America continued to buy gold ETFs in the two weeks of March 15 and March 22, buying $12 billion and $2.6 billion respectively, while Europe sold $14.5 billion in the same period. In the Asia-Pacific region, the willingness to buy gold ETFs in recent years has been significantly stronger than that in Europe and the United States, which is related to the overall accommodative monetary policies of major economies in the region. From the beginning of 2024 to the week of March 1, the Asia-Pacific region as a whole continued to buy gold-backed ETFs, with small profits in the two weeks of March 8 and March 15, before turning back into net inflows in the week of March 22, and continuing to refresh the weekly buying volume in recent years in the weeks following March 29. North America turned net inflows in the week of April 19, which was related to the exercise of call options such as GLD after gold's rally. In terms of jewellery demand, traditional jewellery jewellery economies such as India and Turkey remained the main consumer in the first quarter, while China's negative growth was mainly due to the high base after the economic reopening in early 2023, in addition to Japan, Malaysia, Singapore, South Korea, Egypt, Brazil and other jewellery consumption also increased year-on-year. Jewellery consumption in the first quarter was negative year-on-year, and the increase in jewellery demand was mainly due to retailers' stockpiling, and jewellery inventories increased significantly in the first quarter. In terms of investment demand for gold bars and coins, bar and coin demand in emerging economies generally increased year-on-year in Q1, including China, India, Indonesia, Malaysia, Thailand, Vietnam, Saudi Arabia, Russia, Mexico and Brazil, as well as South Korea and Singapore. The demand for gold bars and coins in developed economies in Europe and the United States has generally been negative, but with the sharp rise in gold prices since March, the demand for gold bars and coins in the United States is expected to rebound in March, and the negative year-on-year growth in the first quarter is mainly due to January and February. From the perspective of central bank purchases, many central banks continued to increase their holdings of gold in the first quarter, including China, Turkey, India, the Czech Republic and other economies that have continued to increase their holdings of gold since mid-2023, and some economies that sold gold at the end of 2023 also turned to increase their holdings in the first quarter of 2024, such as Kazakhstan, Singapore, Kyrgyzstan, Mongolia, Mexico, etc. Changes in the monetary system are in the ascendant, and the pace at which central banks increase their holdings of gold will continue. Regionally, excluding central bank purchases, demand in Asia Pacific and the Americas grew year-on-year in Q1, with the decline mainly driven by Europe.
★
★