The World Gold Council (WGC) reported Wednesday that global gold demand rose by 5 per cent year-over-year in the third quarter of 2024, reaching 1,313 tonnes — the highest third-quarter demand on record. This growth was largely driven by strong investment activity amid record-high gold prices.

The WGC's Q3 2024 Gold Demand Trends report showed a sharp rise from the previous year's demand of 1,249.6 tonnes, bolstered by significant inflows into gold ETFs (exchange-traded funds) primarily led by Western investors. Global investment demand more than doubled year-on-year to 364 tonnes, while global ETFs added 95 tonnes, marking the first positive quarter for ETFs since early 2022.

Although demand for gold bars and coins dropped by 9 per cent, the year-to-date figure remains strong at 859 tonnes, outperforming the 10-year average of 774 tonnes. Central bank gold purchases fell by nearly half, declining 49 per cent to 186.2 tonnes compared to 363.9 tonnes during the same period in 2023. The National Bank of Poland emerged as the largest buyer, adding 42 tonnes to its reserves.

The sharp price increase in gold since March impacted central bank purchasing, with some banks opting to sell in response to record prices and rising costs.

Gold prices averaged $2,474 per ounce during the third quarter, reaching new highs and leading to a 12 per cent decline in jewellery consumption by volume. However, the value of jewellery sales rose 13 per cent, reflecting consumer willingness to spend more on lower quantities of gold.

Overall, total gold supply grew by 5 per cent, supported by a 6 per cent rise in mine production and an 11 per cent increase in recycling.

Commenting on the quarter, WGC Senior Markets Analyst Louise Street noted the surge in investment, saying, "Increased investment and over-the-counter activity have driven up global demand and sustained price performance. While the higher gold price has tempered demand in most consumer markets, the import duty reduction in India kept jewellery and bar and coin demand notably high."

Street highlighted that a "fear of missing out" among investors, along with expectations of future interest rate cuts, is spurring greater demand. She added that economic uncertainty, especially US political instability and Middle East tensions, has also boosted gold’s safe-haven appeal.

Looking ahead, Street said that the current trend in gold investment flows is likely to continue, which could keep both demand and prices elevated. However, with 2024 already seeing over 30 record price highs, challenges remain for consumer affordability.