Global Gold Demand in Q3 2024 - WGC

In the third quarter of 2024, global demand for gold hit record levels, showing a 5% year-over-year increase to a total of 1,313 tons. The value of this demand exceeded $100 billion for the first time, reflecting rising interest in gold amid economic and geopolitical uncertainties. This analysis examines the factors driving gold demand in major markets, including China, India, the United States, and Europe.

China: Slowing Demand in the Face of Economic Changes

After a strong start in the first half of the year, China’s bar and coin gold investments lost momentum in Q3. Although the year-over-year comparison indicates a slowdown, this is mainly due to the high demand in the same period last year. Despite this, China’s gold demand remains robust in the long term, with year-to-date figures at their highest since 2013.

The slowdown in Chinese demand is due to several factors. The strengthening of the yuan made gold less attractive as a hedge against currency risk. Additionally, the People’s Bank of China (PBoC) announced a temporary pause in gold buying, likely dampening demand. Furthermore, the government’s recent economic stimulus package diverted investors' attention toward equities and real estate, reducing the appeal of gold as a safe haven.

Moving forward, demand is expected to pick up slightly in the fourth quarter as interest rates are anticipated to drop. However, investor confidence in equities and real estate, combined with the stability of the yuan, may continue to limit the attractiveness of gold as an investment in China.

India: Strong Demand Amid Price Corrections

India saw a significant rise in gold demand, reaching its highest third-quarter level since 2012. A reduction in import duties in July led to a price correction that allowed many investors to enter the market. This demand was especially strong as investors anticipated purchases for the Q4/Q1 wedding and festival seasons.

However, the surge in prices and the onset of the Shradh period (a culturally inauspicious time for gold purchases) slowed demand in September. Still, overall demand remains strong, with many investors buying gold bars with the intention of exchanging them for jewelry later in the year.

India’s gold demand for 2024 is on track to be one of the highest in recent years. As prices continue to fluctuate, investors are likely to look for further price corrections to increase their holdings.

United States and Europe: Balancing New Investments and Profit-Taking

In the United States, demand for gold bars and coins declined year-over-year for the third consecutive quarter, although the pace of this decline has slowed. The high gold price has had a mixed effect: while it attracted new investors interested in strong returns, it also prompted existing investors to sell part of their holdings at higher prices. Demand remains significantly above pre-pandemic levels, partly supported by retailers like Costco.

European gold demand saw its first quarterly improvement since early 2023, with liquidations in Germany slowing as many investors had already taken profits from their holdings. Toward the end of the quarter, record-high gold prices renewed interest in gold buying, as investors anticipated further price increases.

However, high interest rates and elevated gold prices present challenges for demand in Europe, particularly amid the region’s ongoing cost-of-living pressures. Gold remains an attractive investment, but affordability issues could impact future demand growth.

Central Banks: A Strategic Approach Amid High Prices

Central banks bought 186 tons of gold in Q3, representing an 8% decline from the previous quarter. The sharp rise in gold prices since March led some banks to curb purchases and even prompted tactical selling of reserves in certain cases.

Strategic buyers—banks with long-term gold investment goals—continued to add to their reserves, with the National Bank of Poland purchasing an additional 42 tons. On a rolling four-quarter basis, central bank purchases remain well above historical averages, highlighting the ongoing role of gold as a key asset in reserve diversification strategies.

Conclusion: Gold’s Position in a Complex Global Market

The third quarter of 2024 demonstrated a diverse set of drivers for gold demand across major markets. In China, economic stimulus and a strong currency have tempered the appeal of gold as a safe haven. India’s demand remains resilient, bolstered by favorable price corrections and cultural factors. Western markets, particularly the U.S. and Europe, continue to experience a balance between new investments and profit-taking. Meanwhile, central banks maintain a cautious yet strategic approach to gold purchases amid high prices.

As we move into Q4, global gold demand will likely hinge on factors like economic policies, interest rates, and geopolitical stability.