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Consumer and Industrial Demand for Gold

Author: Ian Davis - Bullion Manager

Published: 14 Nov 2018

Last Updated: 9 Jul 2020

Synopsis

There appears to be no end in sight to the consumer demand for gold. With the world's reserves of gold lower than ever, many predict the price will remain high for some time to come.

Sometimes we can hardly keep up with orders for our popular products!

Industrial Gold

Industrial Gold

Sources of Demand

December 2018 was a bullish month for gold backed exchange-traded funds (ETFs) which saw inflows of roughly $2.5bn. This is equivalent to 2.4m ounces or 76 tonnes of physical gold. This continued in early 2019 with investors making a switch from under-performing equities to the backdrop of Brexit, a sluggish US economy and a slowdown in Asian markets led by the Chinese. 

As of the third quarter of 2018, the World Gold Council reported a 28% rise in gold coin and bar demand. With currencies weaker across the globe and tumbling stock markets, investors are moving to gold as a safe haven. They also reported a 6% rise in jewellery demand. This is something we can relate to, especially in the run up to Christmas! There has been more demand in physical gold than gold ETFs, which showed a sharp decline that has offset overall demand. The final boost to demand came from central banks buying up gold, resulting in an overall demand of 964.3 tonnes - 6.2 tonnes more than last year. 

Global demand has increased, with China leading the charge as the largest gold market. Since the establishment of the Shanghai Gold Exchange in 2002, China's gold market has grown despite a fairly narrow investor base and "infant" infrastructure. As policy and regulatory changes in coming years open up domestic investment as well as international, we expect China to continue to reign supreme. 

Consumer and Industrial Demand For Gold

World Gold Council

In 2015 the World Gold Council commented on the highest demand ever recorded, as many took steps to preserve their wealth moving away from other traditional investments. China, India, and Russia are active in the worldwide gold rush. China sees the highest recorded private gold ownership. Europe is also active with France, Germany, and Switzerland reporting record increases. Germany tops the list with the highest gold ownership. 

Further Reading

You may wish to view all of our articles on our gold guide.

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