It rises and rises and rises: The price of gold has been rising steadily for many months. Who is responsible for this: Investors? Central banks? The jewelry industry? Shijiao You has analyzed who is driving up the price of the precious metal with their purchases – and who is currently selling gold.
The analyst from HQ Trust’s Strategic Asset Allocation division looked at net gold investments in bars and coins, ETFs and similar products, the purchases and sales of global central banks – but also the proportion that is in demand from the jewellery industry and the technology sector. Shijiao You’s analysis starts in the first quarter of 2010 and ends in March 2024, using the net investments in gold per quarter and the average gold price in dollars in the corresponding months.
Looking at the development of gold demand from 2010 to the end of the first quarter of 2024, Shijiao You says:
“On average, gold demand has increased by 6.5% per year over the past 14 years. The gold price in dollars increased by 5% per year over the same period.”
“Demand from the jewelry and technology sectors has declined slightly in relative terms over this period but is still around 50%.”
“The share of gold investments is now only around 16%. In the first quarter of 2010, it was still 27%.”
“In contrast, net purchases by central banks have grown strongly. The share of demand here has almost quadrupled to 23%.”
This is how Shijiao You assesses the latest developments:
“The world’s central banks have recently bought significantly more gold. Their investments are at their highest level since the beginning of the observation period.”
“According to data from the World Gold Council (WGC), Russia, China, India and Turkey in particular have significantly increased their gold reserves in recent decades.”
“Overall net inflows into bars and coins have also reached a new ten-year high. It is striking that net purchases of bars and coins in China have recently increased significantly.”
“Investments in ETFs and similar products developed very dynamically during the analysis period. However, since Q4/2020 – with the exception of Q1/2022 – only net outflows have been observed in ETFs overall.”
“According to the WGC data, ETF net purchases in this period came predominantly from Asian countries, while net outflows were almost exclusively from North America and Europe.”
