Record gold prices have boosted the recycling of the precious metal to the highest level in more than three years, as consumers take advantage of high prices to trade in jewellery, according to the World Gold Council (WGC).
Gold prices have surged, reaching a record-peak of $2,431.52 per ounce on April 12, driven by various factors such as the expectation of US interest rate cuts and geopolitical tensions like the Israel-Gaza conflict and Russia-Ukraine standoff.
Rising Gold Recycling
The WGC reported a 12% increase in gold recycling, the highest level since the end of 2020. This trend is driven by the relationship between gold prices and recycling activities – as prices increase, more people are inclined to sell their gold to capture the higher value.
Additionally, the macroeconomic uncertainty in various markets is causing individuals to hold onto their gold as a safe haven asset.
Global Demand and Technology
While total gold demand dropped by 5% in the first quarter year-on-year due to higher prices, demand in Asia offset declines in Europe and North America. The demand for gold in technology also recovered by 10% year-on-year, particularly driven by the growing demand for gold in the electronics sector amid the artificial intelligence (AI) boom.
The WGC’s senior markets analyst, Louise Street, mentioned that the strong performance of gold in 2024 is likely to continue throughout the year. If prices stabilize in the coming months, price-sensitive buyers may re-enter the market, and investors will continue to turn to gold as a safe haven asset amidst uncertainties surrounding rate cuts and election outcomes.
Global Political Climate Impact
Street highlighted that 2024 is marked by several crucial elections around the world, including those in Britain and the United States. Elections in countries like Pakistan, Russia, Senegal, and India are also influencing the gold market as investors seek clarity and security during times of political change.
