Financial Services Association, April 30 (Editor Zhao Hao) On Tuesday (April 30), the “Global Gold Demand Trend Report” for the first quarter of 2024 released by the World Gold Council (WGC) showed that total demand for gold, including over-the-counter (OTC) transactions, increased 3% year-on-year to 1,238 tons during the quarter, “the strongest first quarter since 2016.”

OTC refers to market participants directly trading with each other, which is how the vast majority of markets operate. According to WGC data, demand in this category reached 136.4 tons in the first quarter, up 220% year over year. At the same time, however, demand for gold, excluding OTC, fell 5% year over year to 1,102 tons.

Juan Carlos Artigas, head of global research at WGC, added that although the OTC market is less transparent, current data strongly suggests that demand still comes from Asian consumers. “Asian consumers are actively pouring into the gold market, but this strong demand is happening more in the OTC market.”

Joe Cavatoni, the agency's North American market strategist, told the media that the continued increase in holdings and consumption of emerging market central banks made a key contribution to gold performance. “Judging from their continued consumption, gold plays an important role in the reserve portfolio, and the situation remains strong for the rest of the year.”

In the demand segment, demand from even non-OTC central banks and other institutions has reached 289.7 tons. This figure is the strongest start to the year since the World Gold Council tracked it in 2000, up 1% year over year, reflecting that the pace of gold purchases by central banks has not slowed down. In addition, investment in gold bars and coins increased 3% year over year to 312.3 tons.

Artigas pointed out that although retail and investment demand may be sensitive to rising gold prices, central banks as a whole are still pursuing diversification of foreign exchange reserves. For them, the price of gold is not the main consideration. “Gold has proven to be a very powerful diversification tool, which is one of the key reasons why central banks think they should hold more gold.”

However, the report showed a net outflow of 113.7 tons from global gold ETFs, and total holdings fell 4% to 3,113 tons. Cavatoni believes that speculators and strategic investors are weighing the demand for gold ETFs. “In the US, most of the impact comes from investors' assessments of the future direction of US monetary policy.”

“Without clear instructions from the Federal Reserve, the bank's long-term high ('Higher-for-Longer') interest rate path will curb local strategic investment demand.” Cavatoni said, “But as long as the Federal Reserve takes action to cut interest rates and is accompanied by geopolitical influencing factors, it should form a good environment that can support gold investment.”

Surprisingly, demand for technology gold rebounded 10% year over year in the first quarter. The report said that the boom in artificial intelligence boosted the demand for gold in the electronics industry. As we all know, many computers and electronic devices contain a certain amount of precious metals, which are high in components such as printed circuit boards and processors.

On the supply side, the World Gold Council said that gold production in the first quarter increased 4% year on year to 893 tons, a record high; recycled gold also increased 12% to 350.8 tons. According to the analysis, due to the rise in gold prices, some people are using reselling gold jewelry to get an opportunity to make money.

The report mentioned that the average price of London gold (LBMA) reached a record high of 2,070 US dollars/ounce in the first quarter, up 5% month-on-month and 10% year-on-year. As of press release, spot gold was reported at 2,315 US dollars/ounce, once breaking a record high of 2,431 US dollars in mid-April.

Weekly chart of spot gold prices