International gold industry trade association the World Gold Council’s (WGC’s) ‘Gold Demand Trends’ report for the first quarter of this year reveals that total global gold demand, inclusive of over-the-counter (OTC) purchases, was up 3% year on year (y/y) to 1 238 t, marking the strongest first-quarter performance since 2016.

However, compared to the same period in 2023, gold demand, excluding OTC, fell 5% to 1 102 t.

Speaking at this year’s London Indaba, WGC Europe and Asia market strategist John Reade will partake in a panel discussion on the continuing relevance of gold and will be joined by global gold miners and financers such as Centamin CEO Martin Horgan, Resolute Mining CEO and MD Terry Holohan and Harmony Gold CEO Peter Steenkamp.

This year’s London Indaba will take place over June 25 and 26, at the InterContinental Park Lane Hotel, in London.

Healthy investment from the OTC market, persistent central bank buying, and higher demand from Asian buyers, helped drive the gold price to a record quarterly average of $2 070/oz, which is 10% higher y/y and 5% higher quarter-on-quarter.

“Central banks continued to buy gold apace, adding 290 t to official global holdings during the quarter. Consistent and substantial purchases by the official sector highlight gold’s importance in international reserve portfolios amidst market volatility and increased risk,” the WGC notes.

Turning to investment demand, the WGC reports that bar and coin investment increased 3% y/y, remaining steady at the same levels from the fourth quarter of 2023, at 312 t.

Gold exchange-traded funds continued to see outflows with global holdings falling by 114 t, led by North American and European funds, but slightly offset by inflows into Asia-listed products.

The WGC notes that China generated the bulk of that increase, with renewed investor interest in gold owing to the weakening local currency and poorly performing domestic equity markets.

Global jewellery demand remained resilient, despite record-high prices, only falling 2% y/y, while demand in Asia countered decreases in both Europe and North America.

In addition, demand for gold in technology recovered 10% y/y, driven by the artificial intelligence boom in the electronics sector.

On the supply side, mine production increased 4% y/y to 893 t in the first quarter – a record first quarter performance, the WGC enthuses.

Recycling also reached the highest level since the third quarter of 2020, jumping 12% y/y to 351 t, as higher prices “were an opportunity for some to cash in on their old gold jewellery”, the WGC notes.

“Since March, the gold price has climbed to all-time highs, despite traditional headwinds of a strong US dollar and interest rates that are proving to be ‘higher for longer’,” says WGC senior markets analyst Louise Street.

She adds a number of factors are behind the recent surge, including heightened geopolitical risk and ongoing macroeconomic uncertainty driving safe-haven demand for gold.

Additionally, the continued and resolute demand from central banks, strong OTC investment and increased net buying in the derivatives market, have all contributed to the higher price of gold.

“Interestingly, we are witnessing shifting behaviour trends from Eastern and Western investors,” says Street.

Investors in Eastern markets are more responsive to the price, waiting for a dip to buy, while conversely, Western investors have historically been attracted to a rising price, tending to buy into the rally, the WGC reports.

“In the first quarter, we saw those roles reversed with investment demand in markets such as China and India growing considerably as the gold price surged,” she says.

Looking ahead, Street suggests 2024 is likely to produce a much stronger return for gold than anticipated at the beginning of the year, based on its recent performance.

“Should the gold price level-off in the coming months, some price-sensitive buyers may re-enter the market and investors will continue to look to gold for a safe haven asset as they seek clarity around rate cuts and election results,” she suggests.