| Press release | |
| Bangkok, 8th May, 2024 | |
Gold demand remains strong in Thailand amid record-high prices
Bar and coin investment shows robust growth
while demand for Thai gold jewellery drops in Q1 2024
The World Gold Council’s Q1 2024 Gold Demand Trends report reveals that Thailand saw a 10% y/y increase in demand for gold bar and coin investment, compared to the same period in 2023. The total consumer demand in Thailand increased 4% y/y despite record high prices while globally the total demand (inclusive of OTC purchases) was up 3% year-on-year to 1,238t, marking the strongest first quarter since 2016. Global demand excluding OTC fell 5% y/y to 1,102t in Q1 2024.
The global demand increase was mainly attributed to healthy investment from the OTC market[1], persistent central bank buying, and higher demand from Asian buyers. This helped drive gold prices to a record quarterly average of US$2,070/oz—10% higher year-on-year and 5% higher quarter-on-quarter.
Central banks continued to buy gold apace, adding 290t to official global holdings during the quarter. Consistent and substantial purchases by the official sector highlight gold’s importance in international reserve portfolios amidst market volatility and increased risk.
Turning to investment demand, global bar and coin investment increased 3% year-on-year, remaining steady with the same high levels from Q4 2023 at 312t. Thailand saw a 10% y/y increase in gold bar and coin investment to 5.9t. Domestically the price of Thai gold rose higher than the international rate due to continued depreciation of the Thai baht during Q1 2024.
Gold ETFs continued to see outflows with global holdings falling by 114t, led by North American and European funds but slightly offset by inflows into Asian-listed products. China generated the bulk of that increase, with renewed investor interest in gold due to the weakening local currency and poorly performing domestic equity markets.
Global jewellery demand remained resilient, despite record-high prices, only falling 2% year-on-year. Demand in Asia countered decreases in both Europe and North America. Thailand, Vietnam and Indonesia all experienced similar y/y declines in jewellery demand, with Thailand falling by 10% to 1.9t, Vietnam decrease by 10% to 4.1t, and Indonesia decreased by 12% to 5.5t. This is due to the gold price rally in late Q1 that choked off regional demand.
In addition, demand for gold in technology recovered 10% year-on-year driven by the AI boom in the electronics sector.
On the supply side, mine production increased 4% year-on-year to 893t – a record first quarter. Recycling also reached the highest level since Q3 2020, jumping 12% year-on-year to 351t, as some investors saw the high price as an opportunity to take profits.
Mr. Shaokai Fan, Head of Asia-Pacific (ex-China) & Global Head of Central Banks at the World Gold Council, said “Despite gold prices raising to a series of all-time highs in the first quarter of 2024 that effected the gold jewellery market, total consumer demand in Thailand still increased 4% compared to the same period last year supported by an increase in coin and bar investment. We saw a decrease in demand for gold jewellery in Thailand as demand fell when prices started to rise in March. This also led to a sharp rise in recycling activity.”
Louise Street, Senior Markets Analyst at the World Gold Council, commented “Since March, the gold price has climbed to all-time highs, despite traditional headwinds of a strong US dollar and interest rates that are proving to be ‘higher for longer’.”
“A number of factors are behind the recent surge including heightened geopolitical risk and ongoing macroeconomic uncertainty driving safe-haven demand for gold. In addition, the continued and resolute demand from central banks, strong OTC investment and increased net buying in the derivatives market, have all contributed to the higher price of gold.”
“Interestingly, we are witnessing shifting behaviour trends from Eastern and Western investors. Typically, investors in Eastern markets are more responsive to the price, waiting for a dip to buy, whereas Western investors have historically been attracted to a rising price, tending to buy into the rally. In Q1, we saw those roles reversed with investment demand in markets such as China and India growing considerably as the gold price surged.”
“Looking ahead, 2024 is likely to produce a much stronger return for gold than we anticipated at the beginning of the year, based on its recent performance. Should the price level off in the coming months, some price-sensitive buyers may re-enter the market and investors will continue to look to gold for a safe haven asset as they seek clarity around rate cuts and election results”, Ms. Street added.
The Gold Demand Trends Q1 2024 report, which includes comprehensive data provided by Metals Focus, can be viewed here.
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For further information please contact:
Maetavarin Maneekulpan, TQPR Thailand, T: 02 260 5820 E: mae@tqpr.com
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- Over-the-counter (OTC) transactions (also referred to as ‘off exchange’ trading) take place directly between two parties, unlike exchange trading which is conducted via an exchange. ↑