gold news

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[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Joe Cabaton, senior market strategist America's at the World Gold Council. Thank you so much for being here. Great to have you once again. Thanks for having me, Charlotte. It's always a pleasure. Really good to be catching up with you as always. There is so much going on for us to discuss and our main topic today is going to be the World Gold Council's new demand trends report for gold which is just coming

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out. So we'll make sure to go into all the details on that. But I wanted to start with the price because we've seen such strong price activity in gold even just since our last conversation which was about a month ago. So at that time I think we were just getting to the 3000 level for gold and of course it's it's proceeded upward from there. We talked a lot about the fundamentals supporting the market and I wanted to check in with you there. Is this price still supported by the fundamentals you see for gold?

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100% and I couldn't be more clear on that. The price that we were talking to last quarter and where we are now. We've seen record setting prices and we've seen a pace that we've never seen before in terms of reaching those record setting levels. We've topped 3500. This is all not a big surprise when you step back and think about what we've been signaling and talking to about risk, risk and uncertainty. And now that we see the administration in the US in their seat and the policies that are

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coming down the line, this is all very much what we were expecting to see. And most analysts in the market are seeing their price predictions for 2025 revised upward. And actually, we're even hearing that 4,000 number now, a lot more than we heard the 30,000 number. And it's really quite an interesting time. And the fundamentals remain strong. And I think this report does an exceptional job of giving everybody the data and the insight to help you understand where that demand is coming from and why we

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think that those fundamentals will stay in place. Okay. Well, that's certainly very reassuring words. That's what I like to hear when we're talking about the gold price. And definitely I'm starting to see those higher numbers become more widespread as well. So with that backdrop there on the gold price, let's get into the Q1 gold demand trends report. I think one of the key stats is that total Q1 gold demand came in at the highest level for a first quarter since 2019. So that seems very important to

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begin with. I'm wondering if you could talk about the key driver there. Absolutely. You're right. I think it's really good for people to understand as well as highlighting the demand in tonnage and that slight level above where we have been since 2019. What's also important is by value it's up 40%. So if you take it at its face value it's a good number. If you take it at its total value it's an exceptional number. high prices, record demand, and actually continuing to see a

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40% increase in demand on terms of value. So, that's really, really exciting. And what's behind it are three main strong cases for gold. One continues to be the central bank community. Two, the investment community on a global scale is very active right now. And three, on the technological side, the technical and industrial use of gold, we're actually seeing that hold firm. maybe not growing but holding firm which is really reassuring in a world where you have increased prices costing

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more when you have a technical application for gold or electronic use of gold. So those three cases and the one weak spot which we expect jewelry but those fundamentals are kind of very important for people to understand investment central banks and stability around technological industrial use. Okay. So, let's dig a little bit deeper into those components as we usually do when we're we're looking at this report. Starting on the investment side, I wanted to go into what's happening with

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ETFs because it looks like Q1 was the strongest quarter in 3 years for ETFs. It sounds like that strength came across the board, but I'm wondering if you can go into any any nuances that you would pull out there. Yes. So, the first thing I'm going to highlight, and you'd probably be surprised to hear this because I sit in the Americas, but I'm going to talk to the Asian ETF market. And actually, 2024 had record flows in China, India, Japan, and the adoption of investment vehicles

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like ETFs in those markets, which is a really, really interesting development for the markets in the region, which have historically been investment markets in the physical sense. That trend has continued into first quarter specifically and particularly in China. We've seen really strong demand there. Then on top of that, that eastern investment and what we saw in the second half of last year with the Western investor, those investors are back again at the table. North American ETF flows are exceptionally strong, 134 tons

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during the first quarter and really just putting the money to work and understanding the risk and the risk offset that you get by adding gold to your portfolio. So at record price levels bringing in the tonnage that we were hoping and looking to see over the last few years which it started in second half really motivated in the second half of last year by rate moves kind of paused and now with risk and uncertainty back at the game. So the Asian and the North American markets, significant flows, positive flows in

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Europe, smaller. And let's take a look at what develops over the course of the year for the European community because I think that Europe has been lagging in terms of some of the economic developments that we've seen in the Americas and I think you'll see that play out in the second quarter and into the second half of the year. And my expectation is those numbers will look to be strong as well. Yeah, I think that's exactly what I was going to ask you. In terms of the rest of the year,

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if you see these trends that we're currently seeing in ETFs continuing on, it sounds like we could see some changes. Is is there anything else you would add on that note? Well, there's two things that I'd add. It will eb and flow in the western markets in particular in North America. And what I mean by eb and flow, we might see large flows in some profit taking as we see the market and the price move in conjunction with how western investors are assessing risk assets. So it won't

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necessarily be a smooth and steady upward trend always for the rest of the year. But pay close attention to what's playing out because it'll signal where sentiment is going. What we've actually seen over the last few years have been dollar values holding if not growing in the ETF space. Dollar values will be up. AUM will be up. Units outstanding will be up. And I think again it'll move in tandem with how risk sentiment is playing out at the point in any point in time. And I think that that's what's

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going to be key from particularly on the western markets. One last point on investment. While we talk a lot about exchangeraded funds, I won't I'd be remiss to overlook the fact that bar and coin demand still a very major component of investment on a worldwide basis. Strong in China and actually strong in India as well. um but a bit down in the western markets in particular in the US market which is not terribly surprising because most of the foreign coin demand is moving on a little bit more anti-

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Republican I should say anti-democratic sentiment or maybe a little more politically motivated or uncertainty around the political outlook in the US. So the demand profile for bar and coin globally again a very strong quarter and again that's been more of an eastern or Asian market demand. Yeah, it seems like more and more pieces really are are slotting into place here. And of course, this is not to discount what's happening with the central bank buying, which we should go into that as well. It sounds

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like for Q1, it was strong. Not as huge numbers have we as we've seen in some recent quarters, but definitely strong. What What countries should we be paying attention to right now when it comes to central bank demand for gold? Yeah, you know, Charlotte, I think your your highlight of uh what the number looked like is is fair, but I would just call out that the last three years, we've been seeing exceptional flows. And actually, um when compared to previous years, uh first quarter of last year,

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well, it's slightly down, it's still a significant number at 244 tons. So that is well above the 5-year average on a quarterly basis. And actually, if you annualize that out, we're looking very close to these record or near record setting levels we've seen over the last 3 years. More specifically to your question, Poland, China, Kazakhstan, Czech Republic, all markets that were stand out in first quarter adding and disclosing the addition of those gold holdings to their portfolios.

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Pullman was probably the largest standout who had um about 49 tons I think it is in first quarter for this year and actually 2024 they had 90 tons that they added to their portfolio. So all in you're looking again at emerging market central banks and this move to add gold as a diversifier for a myriad of different reasons. And I think economic risk, geopolitical environments, these are all factors that are actually just continuing to give this strong case for central banks and others to continue to add gold to the

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portfolios. Really good points. And I think one thing that people wonder when they think about central bank buying is they look at the high gold price and they wonder, okay, what is the level that central banks might think, oh, that's too high. I'll wait for that to pull back. Is is a higher gold price, these record levels going to influence what central banks do? What what do you find that you see there? So I think it's an important thing to keep a close watch on the price, but central bank or investor or anyone else

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that's interested in the gold market needs to understand that the price movement that we're seeing heading forward and heading up continues to be supported and there's not a lot of factors on the horizon to drop the price at this stage. And so while it's important to understand it, most central banks, most investors are allocating on a dollar basis versus a tonnage basis. So if their dollars are still adequate to make a purchase, they're going to allocate and they're going to make that

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purchase. And that contribution to a portfolio, as long as they can see a case for continued price appreciation in gold, and I don't think there's any fear around where the price is. So I think that even in the range where we are today between 3200 and 3500, central banks continue to see opportunities to step in on dips and actually they continue to see a strong case going forward for the benefits of diversification. And so I think that price is important. I think they're astute to see buying opportunities, but

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I also think they understand their dollars being put to work is more important than anything else. I think that makes total sense, but always good to go into that and take a look at what's going on there. So, you also mentioned the technology demand aspect for gold, which was pretty pretty steady in Q1. It sounds like the report also talks though about the tariff angle when it comes to technology demand. So, I'm wondering if you can go into what you see going on there. Sure. And again, this is the smallest

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component when it comes to the use case for gold. But what's exceptional about what we're seeing is a flat level of consumption. And always understand that historically gold may have been at the forefront of a technological advance or development of a certain aspect of technology, but when an a technological community could find a substitute for it, it would be substituted out. So to see that number strong and consistent even at flat, we like it because it rounds out three use cases that are

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absolutely exceptional for gold. But with tariffs, with supply chain issues, with challenges around moving assets around the globe, it could become more limiting in terms of how it gets used in technology or electronics, which actually has moved a little bit more than just the pure technological advancement. So, we're keeping a close watch on tariffs. We agree that it's something that could be quite disruptive if they come into full effect, but we've heard from the administration that

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there's been the threat, there's been the announcement, there's been the implementation, there's been in certain instances the pauses. So, this is something that we could talk about at at length here today and come tomorrow could be completely different. So, we're keeping a close watch on the space. It does not appear to have had an impact on the ability for access from investor central banks or for that matter in the technological space yet but it could have some implications if we're not

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careful and we um have them them being the tariffs play out in a way that could be detrimental to assets moving across borders. So, it's a wait and see or watch the space. The clock's ticking on the 90 days that the reprieve has been given in the case of the European community. Seems Canada and Mexico seem to have figured out how to handle tariffs as it relates to gold. Um, but again, this is a moving target and keeping us all on the edge of our seat as we watch and wait. Yes, definitely

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appreciate the tariff comments. it is pretty much impossible to say very much and have it still be accurate in the next day or two days or weeks. So, good to go into what we can there. I wanted to take just a a quick look at the jewelry side. You already talked a little bit about that and how jeweler demand is dampened because of the high price. I don't know if there's too much more to add there, but I'm curious. That's that's a pretty typical thing to have happen in a high gold price

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environment, right? It is. It is. And what we would encourage everybody to keep a close watch on and understand and watch for the shift is when the jewelry industry, the fabrication industry can adapt to higher prices and the consumer sentiment. And we watch those numbers purely from the economic side to see where those that those numbers impact overall investment demand. But it also implication in the jewelry industry adapting to higher levels. So creating access to jewelry that's in smaller

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forms or lower price points even with a higher per unit price. they can ultimately make this adoption and adapt adaptation over time. And I think it's really interesting to keep a close watch on it. But as expected, higher prices less likely for people to put their hand in the pocket and spend as a pure consumer. But interestingly, in China and India, two markets where jewelry transcends not only pure consumption and bling, as we would call it, to a form of savings, you see this rise of investment

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vehicles. So watch as well as we see for China and India adopting more sophisticated investment vehicles like ETFs like different products from the Shanghai gold exchange as an example and over time we can take a look and see if that demand is outpacing the decline in in jewelry but again jewelry there'll be a moment consumption will come back again the two biggest markets down quite a bit about 19 to 25% China and India respectively but also So Turkey, the Middle East, etc. And the US of course

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is also down. Again, this is about people putting their hand in their pocket and thinking it's the right time to buy something uh quite nice and and and and shiny in the gold jewelry space. And I think that that's going to be on hold until we can figure out how the econ economic outlook settles in post uh US Liberation Day. Absolutely. I think it's another part of the market that makes total sense, but still good to go into all the dynamics there. So, thank you for that. So, we've we've touched on

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a lot of the important aspects of demand here, and I wanted to spend a little bit of time on the supply side before I let you go. So, of course, we have the gold price very high, and miners will probably be wanting to increase the amount of gold they can produce, but we know that they're they're limited in the actual increases that they can do. So, curious to know whether you think that moving into 2025, we'll see any major changes on supply side. I I think it's been very positive for

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the mining industry in terms of the demand profile and I think you're right, they are moving as fast as they can to get as much supply into the system and we're seeing that expected level of increase of about 1 to 2%. So I think that the mining industry is going to continue to produce. It's going to continue to have the ability to get the benefits that come from a higher gold price even in a world where we're still in a world of sticky inflation. So some cost factors that play into production

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still at high levels that could be impacting their ability to have even a higher profit margin. But I think it's overall a very very good market for the gold mining and supply side community. What I think is also interesting to see is with the higher prices and with the concern on the consumer side, particularly around jewelry, you know, we've got the recycling which actually is a little bit down, which is a bit more of a surprise for us. Um, with the higher prices, we would expect to see

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recycling higher, but let's take a closer look at that into the second quarter and into the second half of the year to see if it continues to be a contributor to the overall supply of gold. So, mining steady and strong, you know, in terms of the uh recycling side of things, I think we'll wait and see how things develop there, but some of the markets where we would have expected to see a little bit of a higher level of recycling slowing a little bit in first quarter. So worth watching definitely me

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worth understanding and ultimately um an interesting time for sure for both sources of supply for the gold market. Very interesting and certainly we'll we'll keep an eye on those elements and we can check back in on them in the the next report that comes out. I think that is all for me but before I let you go I'll put it back to you and ask if there's any other points about gold that you would leave investors with right now. I think keeping a close watch on the investment market right now is very

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interesting. You know there have been developments not only in the US in terms of western investors coming back but in markets like China where the insurance industry is coming online with a pilot program all these sound bites that are telling us that the world's adoption and acceptance of gold as an investment very high. And lastly in the US you know the administration is calling out gold in a lot of what they're talking to whether it's in the investment form or in the investment into the community of

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production etc. So while not a critical mineral definitely very strategic even in the US. So I think it's really an exciting time for gold and pay close attention to the market which is really right now looking very very strong. Very good note to end on. Thank you so much for coming on once again to go over what's happening in gold and the latest report. Hopefully, we'll have you back again soon and we'll we'll check in on all of these different developments. Thanks for having me, Charlotte. Of

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course. And once again, I'm Charlotte Mloud with investingnews.com and this is Joe Capatoni with the World Gold Council. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]