MetalsFocus: Global total gold demand in 2024 may decline year-on-year
In 2024, the global total gold demand is expected to decrease year-on-year, mainly due to the impact of production growth driven by new projects and expansion of existing businesses globally. The price of gold is supported by expectations of interest rate cuts, global central bank purchases, geopolitical tensions, and the level of U.S. debt. However, high interest rate policies, high holding costs, and funds flowing into other asset classes have limited investors' interest in gold. In 2023, global gold mining production increased by 0.3% year-on-year, maintaining rising costs, but the rise in gold prices brought higher profit margins. Gold jewelry demand saw a slight increase, while global retail investment declined, with central bank purchases exceeding those in 2022. Other fundamental factors are also favorable, with prices rising in multiple physical gold markets
According to the information from the Intelligence Finance APP, on July 28th, at the 2024 China International Gold Conference jointly organized by the China Gold Association and the World Gold Council, the "Global Gold Yearbook 2024" (Chinese version) was officially released. Overall, except for a few periods of high volatility, the gold price in 2023 mostly maintained a sideways trend. Factors such as rising rate cut expectations, strong central bank buying globally, escalating geopolitical tensions, and concerning levels of U.S. debt supported the gold price. However, on the other hand, factors such as the Federal Reserve's insistence on a high-interest rate policy, high holding costs, and funds diverted to other asset classes limited investors' interest in gold. In 2024, it is expected that the production growth will be driven by the commissioning of new projects globally and the expansion of existing operations. In comparison, global total demand may decline year-on-year.
In terms of supply, global gold mining production in 2023 increased by 0.3% year-on-year to 3,646 tons. Due to the increase in artisanal and small-scale gold mining (ASM) supply, as well as the full production recovery of the Sibanye-Stillwater company, production in Colombia and South Africa increased significantly. The total sustaining cost of major gold producers rose to $1,295 per ounce. Input cost inflation continues to exist, however, despite the rising costs, the increasing gold price has brought higher profit margins.
The fundamentals in 2023 showed some resilience. Gold jewelry demand increased slightly by 1% compared to 2022, and global retail investment decreased by only 1% year-on-year. Among many factors, the role of central banks globally was once again highlighted. Central bank gold total purchases in 2023 exceeded 2022, surpassing 1,000 tons. If the Turkish central bank did not sell significantly around its general election, the net purchase volume could even reach a historical high. Other fundamental factors in 2023 were also positive, as evidenced by the widening price increases in gold priced in local currencies in several important physical gold markets