Gold has been the standout commodity performer this year, gaining 18.5% and posting a record high. Spot gold ended at $2,443.29 an ounce on Aug. 2, maintaining gains that peaked at an all-time high of $2,483.60 on July 17. The World Gold Council’s quarterly report highlighted a total demand of 1,258.2 metric tons in the second quarter, the highest on record and 4% above the same period in 2023. The largest demand increase came from the Over The Counter (OTC) market, with a 53% rise to 329.2 tons, driven by institutional investors and high net-worth individuals. However, jewellery consumption fell 19% to 390.6 tons, and official coin demand dropped 38% to 52.7 tons, indicating potential consumer pullback due to high prices.
Jewellery demand in China and India, the largest buyers of physical gold, saw significant declines, with China down 35% and India 17%. China’s net gold imports via Hong Kong fell 18% in June. India’s demand may temporarily boost after a government import duty cut, but higher prices have weighed on flows into Exchange Traded Funds (ETFs), which saw a net drop of 7.2 tons in the second quarter. Central bank buying also eased. Despite these bearish factors, investor interest in gold remains due to expected monetary policy easing and geopolitical tensions. This mix of influences may keep gold prices in a narrow range for the rest of the year.