According to the World Gold Council (WGC), in the second quarter of 2024, the total demand for gold increased by 4% compared to the same period of the previous year, reaching 1,258 tons. It was the strongest second quarter in 24 years, i.e. since WGC collected data.
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Who buys gold?
So what determined such high interest in the precious metal? As the data shows, only China and India consumed over 47% of the demand for gold coins and bars in the second quarter of this year. For comparison: in the second quarter of last year it was less than 30%.
– This shows how strong the desire to increase gold resources is in both countries. Not only on the part of institutions, for example central banks, but also on the part of citizens themselves – says Michał Tekliński, gold market expert Goldsaver.pl from the Goldenmark Group.
China saw the highest level of retail shopping in 10 years. Interest in bars and coins also increased among citizens of Vietnam – year on year by 30%, in Thailand – by 22% and in Indonesia – by 20%. At the same time, the purchasing activity of citizens of Western countries is decreasing.
– However, taking into account the upcoming economic, political and geopolitical events, there are many indications that interest in the precious metal as a reservoir of value will also return in the USA and Europe. With the continued high activity of Asian citizens, this may lead to a sharp increase in demand for bars and coins, perhaps even comparable to the results from 2020-2022. At that time, both regions accounted for approximately the same share of the market, adds Michał Tekliński.
Central banks increase reserves
In addition to buyers from Asian countries, demand was also supported by OTC transactions, which increased to 329 tonnes, or an impressive 53% year-on-year. Central banks also continued purchases, and in the second quarter they increased their reserves by 183 tons of the metal, recording a 6% increase y/y.
In turn, according to the World Gold Council, from the beginning of January to the end of June 2024, bankers bought a total of 483 tons of the precious metal. This is 5% more than in the previously record first half of 2023, when demand from central banks amounted to 460 tons.
It is worth noting that in the second quarter of 2024, the largest purchases – apart from the Reserve Bank of India – were made by the National Bank of Poland. For three months, the National Bank of Poland increased gold reserves by 19 tons, thanks to which our total resources increased to 377 tons of the precious metal, which constitutes 13% of all Polish currency reserves.
– The purchases will not end there, because at the beginning of this year the NBP management board decided to further increase the share of gold in state reserves to 20%. Recently, President Adam Glapiński repeated these declarations, emphasizing that thanks to this, our country will be stable and solvent in all conditions – reminds the Goldsaver expert.
The data also shows that the use of gold in technology has increased by 11%. They are driven by the development of artificial intelligence (therefore, the demand for new microchips is growing), but also by the demand of the largest manufacturers, who plan to premiere new products in the fall – primarily new smartphone models.
Record bullion prices
The World Gold Council reports that the average gold price in the second quarter of 2024 was $2,338 per ounce. This represents an increase of 18% year on year. The record price per ounce was recorded in May: $2,429 per ounce (although another record was broken in July – by over $38).
– The record-breaking gold price made headlines, and the rate was supported by strong demand from central banks and the OTC market. On the over-the-counter market, we are observing an insatiable appetite for gold from institutional and wealthy investors, as well as family offices that are turning to the precious metal to diversify their portfolios – comments Louise Street, senior analyst for WGC markets, quoted on the website of the World Gold Council.
The price increase is reflected in weaker demand among individual investors. In the second quarter of 2024, investments in gold bars and coins amounted to 261 tons worldwide. This is 5% less than in the second quarter of 2023. Importantly, however, the main decline in interest concerns coins – it amounted to 38%.
Sales of gold bars increased by 12% in the same period. Lower jewelry demand was also recorded – a decline of 19% year on year. The increase in the supply of recycled raw materials was also a response to the increase in gold prices. In the second quarter of 2024, it was the highest in 12 years.
– Interestingly, in the second quarter of 2024, for the first time in twenty years, 2 tons more bars and coins were purchased in Germany than sold. This can be explained by the fact that gold holders who have had it for a long time decided to sell it to take advantage of high price levels and realize profits, says Michał Tekliński.
Despite the decline in demand for bars, coins and ETFs in the West, an inflow of investments into Western ETFs was recorded at the beginning of the third quarter of 2024.
The gold market in Poland is not slowing down
According to Goldsaver's estimates, the Polish gold market amounted to approximately 7 tons in the first half of 2024.
– Everything indicates that the gold sales record from 2022 will not be broken this year. It is no secret that gold gains popularity in times of crises and interest in it increased during the coronavirus pandemic and after Russia's aggression in Ukraine. Importantly, however, we note a growing interest in gold among Polish customers in shorter time frames, conducting quarterly analyses, says Michał Tekliński.
Experts in the precious metals industry have no doubt: the bestseller in the first half of 2024 in Poland was undoubtedly the one-ounce gold bar. This is by far the most popular product on the domestic market for many years, and its popularity is influenced by several factors.
– First of all, a 1-ounce bar has a very favorable price per gram, more favorable than smaller bars. Secondly, it is easy to check its current value by looking at the chart, which is quoted for 1 ounce. And thirdly, it can be bought and sold without any problems – explains the gold market expert of the Goldenmark Group.
Bars weighing less than 1 ounce are also very popular on the gold market, even though the price of gold per gram is slightly less favorable than the popular "one-ounce" bar.
Let's not forget about coins
When talking about bestsellers on the gold market, we cannot forget about coins such as the Australian Kangaroo. It has been the gold coin most frequently chosen by Polish customers for many years.
– Besides, it is very popular not only in our country, but basically all over the world. To the so-called The big six, i.e. the most popular and most recognizable coins on a global scale, also include: Krugerrand, Maple Leaf, Vienna Philharmonic, American Eagle and Britannia – enumerates Michał Tekliński.
These coins are also available in smaller versions: 1/2, 1/4 or 1/10 ounce. However, as with bars, the price of gold in a smaller product is slightly less favorable. Most gold coins purchased are those weighing a full ounce, or 31.1 grams.
– Products of smaller weight, both bars and coins, are very often chosen as occasional gifts. For several years now, in Poland and around the world, we have seen a new trend of gifting items that have a lasting value. It seems that this is a tradition coming from Asian countries, where gold has been a valued gift for centuries. It can also be seen as an interesting response to the commercialized world with various fast products (fast food, fast fashion, etc.). They do not carry any useful value, apart from momentary satisfaction – adds the Goldsaver.pl expert.
Behind the Goldsaver brand is Goldenmark, which belongs to the same capital group, and is a leading distributor of precious metals on the Polish market, which has supplied Poles with approximately 17 tons of physical gold during 14 years of operation. Goldenmark cooperates with renowned producers accredited by the LBMA (London Bullion Market Association), such as the German C.HAFNER, United States Mint and Rand Refinery from South Africa.
What does the future hold for gold?
The WGC report predicts a revival in Western investment inflows to offset weaker consumer demand and potentially slower purchases by central banks compared to 2023. What will be the catalyst that will keep gold at the forefront of investment strategies?
– In the face of the upcoming and long-awaited interest rate cut by the US Fed, inflows into gold ETF funds have increased thanks to the renewed interest of Western investors. A sustained recovery in investment among this group may change demand dynamics in the second half of 2024. Meanwhile, in India, the recently announced reduction in import duties should create positive conditions for gold demand, where high prices are hampering consumer purchases, says Louise Street from WGC.
Representatives of the World Gold Council acknowledge that although there are potential obstacles for gold, there are also changes taking place on the global market that should support and increase demand for the precious metal in the coming months.
