Gold demand reached a historic milestone in the third quarter, surpassing $100 billion for the first time, according to a new report from the World Gold Council (WGC), in a surge fueled by geopolitical tensions and a flight to safe-haven assets, propelled the precious metal to record-breaking prices.
Total gold demand climbed 5% year-over-year to 1,313 metric tons according to Bloomberg, with its value soaring by a staggering 35%. Demand for gold has been so strong that the precious metal’s price has surpassed $2,780 and gold funds saw an influx of $3 billion last week.
The precious metal has seen its price rise every month so far this year, with just minor pullbacks in January and June when its price was flat. Demand for it is soaring as is geopolitical uncertainty surrounding the ongoing conflicts in Ukraine and the Middle East, as well as the upcoming US Presidential election.
Western-listed gold exchange-traded funds (ETFs) recently joined the gold rally, attracting 95 metric tons of global inflows during the quarter—the first net inflows since early 2022. While the WGC is uncertain about the persistence of ETF demand in the fourth quarter, it suggests that continued Federal Reserve rate cuts could sustain investor interest.
However, other traditional sources of gold demand have experienced slower growth or declines. Investment in gold bars and coins decreased by 9% year-over-year, primarily due to weaker demand in China and the Middle East, while India witnessed strong demand for gold bars and coins following a reduction in import duties.
Gold jewelry consumption, according to the report, declined by 12% year-over-year, although the value of demand increased by 13% to over $36 billion. Meanwhile, central bank gold purchases slowed by 8% in the third quarter to 186 metric tons, likely due to the sharp price increase prompting a pause in buying.
Nevertheless, demand remains historically high and has reached levels seen when Russia launched its invasion of Ukraine back in 2022. Central banks, including that of Poland, Hungary, and India, were among the top gold buyers.
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