The World Gold Council (WGC) has recently released its analysis of the gold market, revealing significant trends in demand and supply for the year 2024. This report highlights a remarkable resilience in gold demand, driven by various factors, including central bank purchases, investment in gold ETFs, and technological advancements. However, the jewellery sector faced challenges, reflecting broader economic conditions. This article delves into the key findings of the WGC’s analysis, providing insights into the dynamics shaping the gold market.
Record Gold Demand
In the fourth quarter of 2024, total gold demand, including over-the-counter (OTC) investment, rose by 1% year-on-year, reaching a new quarterly high. This increase contributed to a record annual total of 4,974 tonnes (t) of gold demand. Central banks played a pivotal role in this surge, continuing their aggressive accumulation of gold. For the third consecutive year, central bank purchases exceeded 1,000t, with a notable acceleration in Q4, where they acquired 333t of gold.
Investment Trends
Investment in gold reached a four-year high of 1,180t, marking a substantial 25% increase from the previous year. Gold exchange-traded funds (ETFs) had a significant impact on this trend, as 2024 marked the first year since 2020 where holdings remained relatively unchanged, contrasting sharply with the heavy outflows experienced in the preceding three years. This stability in ETF holdings indicates a renewed confidence among investors in gold as a safe-haven asset.
The bar and coin segment of gold investment remained steady, with full-year demand aligning with 2023 levels at 1,186t. However, the composition of this demand shifted, with bar investments increasing while coin purchases declined. This shift reflects changing investor preferences and market conditions.
Technological Demand Growth
Another noteworthy aspect of the WGC’s analysis is the growth in annual technology demand, which increased by 21t (7%) in 2024. This growth was largely driven by the continued expansion of artificial intelligence (AI) adoption, highlighting gold’s role in modern technological applications. As industries increasingly integrate gold into their processes, this segment is expected to contribute positively to overall demand.
Jewellery Consumption Declines
In stark contrast to the investment sector, gold jewellery consumption experienced a significant decline, dropping 11% to 1,877t. This decrease can be attributed to economic pressures that limited consumers’ purchasing power, forcing them to buy gold in lower quantities. Despite the decline in volume, the total expenditure on gold jewellery rose by 9% to US$144 billion, indicating that while consumers may be buying less, they are spending more on higher-quality pieces.
Supply Dynamics
On the supply side, total gold supply rose by 1% year-on-year to 4,974.5t. Mine production remained relatively stable, with a slight increase to 3,661.2t. However, the dynamics of net producer hedging and recycled gold played crucial roles in shaping the overall supply landscape. Recycled gold saw a notable increase, rising by 11% to 1,370t, as higher gold prices incentivized recycling activities.
Outlook for 2025
Looking ahead, the WGC anticipates that central banks will continue to be significant players in the gold market, with expectations of sustained buying trends. Gold ETF investors are also expected to re-enter the market, driven by lower interest rates and geopolitical uncertainties. However, jewellery demand is likely to remain under pressure, and further growth in recycling is anticipated as economic conditions evolve.
The macroeconomic backdrop suggests a soft landing for the US economy, with gradual interest rate reductions. In Europe, growth remains sluggish, but lower inflation and rates may provide some relief. China’s economic challenges persist, but stimulus measures could lead to a recovery in retail and property sales. Meanwhile, India is expected to experience slow growth, albeit higher than many regions, with declining interest rates and inflation providing a supportive environment for gold demand.
Conclusion
The World Gold Council’s analysis underscores the complex interplay of factors influencing gold demand and supply. While investment in gold remains robust, driven by central bank purchases and technological advancements, the jewellery sector faces challenges amid economic pressures. As we move into 2025, the outlook for gold remains cautiously optimistic, with central banks and ETF investors poised to lead the charge, while consumer-led sectors navigate a more challenging landscape. The evolving dynamics of the gold market will continue to be shaped by macroeconomic trends, geopolitical uncertainties, and changing consumer preferences, making it a fascinating space to watch in the coming years.
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