Gold demand hit records as price soared: industry data

Demand for gold hit a record high in the third quarter as the the precious metal’s price hit all-time highs on geopolitical unrest, industry data showed Thursday.

Total demand grew three percent year-on-year in the July-September period to 1,313 tonnes, the World Gold Council said, as the metal perceived as a safe haven investment benefitted from the Russia-Ukraine war and the Israel-Gaza conflict.

That was the highest level of demand by volume since the WGC began compiling such records around 25 years ago.

“Various regional conflicts, the increasing rhetoric around trade conflicts, all of that combines really to just create this atmosphere of heightened uncertainty” and boost demand for gold, WGC analyst Louise Street told AFP.

A surge in buying, driven by central banks, coincided with gold’s price striking record after record this year.

However since the metal struck an all-time peak in October of $4,381.52 an ounce, it has fallen heavily on profit taking.

Gold demand by value surged 44 percent year-on-year to a record $146 billion in the third quarter, the WGC added in its report.

The US government shutdown and expectations of more cuts to Federal Reserve interest rates, which is weighing on the dollar, have lent additional support to gold’s price in recent months according to analysts.

There has been strong demand for gold via Exchange-Traded Funds on stock markets. ETFs allow investment without trading on the gold futures market.

The high-price environment has, however, dampened jewellery demand, according to the WGC.

It dropped 23 percent to 419.2 tonnes in the July-September period, the lowest third quarter since 2020 when the Covid pandemic took hold around the world.

Street called gold’s recent retreat to around $4,000 an ounce “a healthy correction… that helps to wash out some of that more frothy, perhaps short-term speculative positioning”.