In its latest report, Gold Demand Trends Q2 2024, the World Gold Council (WGC) said it sees gold prices maintaining or slowly building on current levels in H2 2024 if current demand fundamentals remain intact. Western investment demand is likely to produce a positive H2, but WGC has lowered its full year estimate slightly, given a disappointing Q2 for exchange traded funds (ETFs), while over the counter (OTC) investment is likely to contribute significantly, as it did in H1.
The report explains that price sensitivity impacted jewelry demand and it concluded that it may be a while before consumers fully adjust to higher prices. India will likely remain a lone and tentative bright spot, boosted by the recent duty cut and healthy macro backdrop. Technology demand continues to benefit from artificial intelligence (AI) and high-performance computing applications, and this is likely to continue into H2.
The WGC believes that recycling will likely stay in the upper quartile of its historical range due to high prices and economic uncertainty, and mine supply is still poised for a record year, although the council’s full year potential range has shifted slightly lower following a downward revision to Q1.
Mine production should surpass its previous high as the output from several regions — led by Africa — benefits from ramp-ups and expansions, as well as higher grades. Record all-in sustaining cost (AISC) margins are also supportive, but the downward revision to Q1 output makes that target a touch more uncertain than the previous outlook.
Recycling was less significant in Q2 than WGC had anticipated due to a decline in India, where gold-for-gold exchange and gold loans were more prominent, leading the council to marginally revise down its forecast for the rest of the year given a possible flat H2 for prices.
While India will contribute less to recycling in H2, Europe’s recycling response to high prices and economic uncertainty in H1 elevates the risk of further selling back of old jewelry stock in the second half of the year.
A copy of the full report is available at: www.gold.org/goldhub.
