Overview of the global gold market in Q2 2024
Demand for gold was stronger than ever in the second quarter of 2024. The most active buyers were wealthy private investors - up 53% year on year - and central banks - up 6% year on year.
Gold demand reached a record volume of 1,258.2 tonnes in the second quarter of 2024, driven by several key factors and up 4% on the same quarter last year.
The gold price averaged $2,338.20 per troy ounce, 18% higher than in the second quarter of 2023. Two sectors (central bank purchases and private physical purchases of bullion in larger weight units; OTC purchases) played a decisive role.
The massive demand stimulus, combined with weak supply growth of just 4% year-on-year, allowed the gold price to reach new record highs in the world's major currencies.
Ongoing geopolitical tensions, particularly in Ukraine, between China and Taiwan, and in the Middle East, and the associated economic uncertainty, prompted private and institutional investors to seek gold as a safe haven.
Central banks continued to buy gold at a rapid pace, contributing significantly to overall demand. In the first quarter alone, they purchased 289.7 tonnes. This trend continued into the second quarter, although the People's Bank of China slowed the pace of purchases somewhat. Countries such as Vietnam, Turkey and India have replaced China as the largest buyers of gold. In particular, fears of confiscation or even expropriation of foreign exchange reserves in the form of Western government bonds prompted many monetary policymakers from the BRICS bloc to buy gold.
Western wealthy investors increased their gold holdings through OTC transactions in anticipation of a possible interest rate cut by the US Federal Reserve, while Eastern investors, particularly in China and India, also significantly increased their purchases due to local economic conditions and currency devaluations. Overall, demand here was up 53 per cent year on year.
Demand for gold from the technology sector also increased significantly, driven by developments and investment in artificial intelligence (AI) and electronics.
Together, these factors have driven demand for the yellow precious metal to unprecedented levels, underlining gold's role as a critical asset for risk management and wealth preservation in an uncertain environment.
With prices and demand rising to record levels over the past two and a half decades, gold is once again much more recognised as an asset class than it was at the end of the 20th century, including among institutional investors (private equity funds, insurance companies, endowments, central banks, sovereign wealth funds, etc.).
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