[Music] I'm Charlotte McLoud with investing news.com and here today with me is Joe katoni senior market strategist America at the world gold Council thank you so much for being here great to have you great to be back Charlotte thanks for having me really good to be speaking with you and of course what we're here to talk about is the latest gold demand Trends report from the world gold Council so we're going to go into all of those points but before we get there I thought we should go into the price


because as we were saying before we turn the camera on everyone wants to know what's going on with the price right now so it's moved a lot since our last conversation and I'll I'll put it over to you and ask has that price action surprised you well I'll hop there be honest with you it has surprised us a little bit to the upside there's definitely been strong Demand on a global basis and we'll talk a little bit about some of those demand Pockets when we get into the demand report we've just


published but the upside potential has been really exciting to watch but definitely something that is giving us a signal that there might be more than just Strategic investment at play likely some speculative investment playing out as well whether that's in the Americas or actually overseas in Asia uh it's really something that we're keeping a close eye on and as you you can see we have moments when big potential opportunity develop for example strong messaging around potential for rate Cuts


earlier in April you started to see the price really moving and then ultimately as there was further Clarity then we started to see that taper off a bit so pushing the price on the speculative side but definitely strong strong Global demand holding that price above 2200 and really making for a very strong case for gold worldwide well okay yes I think interesting to get your take there and we'll move into some of those demand drivers right now so the world gold council's report is covering what


happened in q1 for gold demand and where I was hoping we could start is on the investment side so if I take a look at my notes Here excluding OTC q1 gold investment was down 28% year on-year and it sounds like that's largely due to ETF outflows especially over in Europe and gold ETFs very interesting so they've been seeing outflows for I believe a couple of years at this point can you explain what's going on there and if that's expected to to change yeah I think let's talk let's put the ETF


Market into context it's about 6% of the investment Market worldwide so while it gets a lot of attention and it's very easy to track the net net flows in the ETF Market it's just a small element that people need to pay attention to now what's been playing out has been very clearly a lot of Western investors anticipating and looking for that Trend in terms of where rates are going to head and the dollar strain so ultimately investors sitting to the sidelines the net flows have been outflows both in the


US and in Europe I think it's 114 tons that we've seen out in the first quarter that's mainly been driven by what we saw in Europe like you've mentioned but also we started to see a shift in the sentiment in the US market this is really a space where invest are looking to add gold to a component of their portfolio and really what we're looking at are investors that are probably watching the two big signals US Dollars and rates as the biggest signal for when they want to make a move back in the


investment Market but what I'd add is that when we talk about demand and you mentioned Demand on investment without OTC there's an OTC element of investment that's very substantial and that's actually where we've been seeing a lot of interest on the part of particularly Asian investors so this is an interesting time right now the price has been impacted less so by the expectation of us rates and US dollar and more so by the geopolitical and overall outlook for investment in the Asian markets the


Eastern markets and that's actually been a real shift in the overall sentiment amongst investors worldwide we've seen less of an impact from price from the dollar and rates and more of an impact from behavior from the East okay and let's let's go back to what you said just at the beginning there so you mentioned ETF only only 6% of the picture there and I asked because I remember the last time that you spoke you again reminded us you know don't look at that as being such a big strong


driver of goal when it comes to ETF so just just to reiterate that I guess now that I think that's an important Point let's put it in a different context for your investors when an ETF sees outflows or redemptions that inventory of gold that's lead leing ETFs needs to be consumed somewhere that goes into the OTC market those bars get bought up all of the demand that's been flowing out from ETFs the 114 tons that have come out from ETFs have had no impact on the price of gold we're seeing seven or


eight record prices over the course of first quarter even in the world that we're seeing where ETFs are seeing outflows so the demand's being picked up it's being picked up by not only investors in the East but by central banks and other okay and the other point that I was going to mention on the investment demand side is the Bor and coin element so I believe that's up 3% year on year and I wondered if we could take a look at that and kind of break down where that is coming from as well sure I think


most of that demand is coming again from the largest markets that you would expect to hear about India and China those have been the biggest markets with demand up in both and I what I'd say to you is ultimately um the Western markets again investors sentiment being a bit weaker so your German and US demands have been seeing significant slowdowns in terms of bars and coins this is again a mechanism for True retail and consumer retail to go about making an investment in gold and you'll see again that it was


driven by China and ultimately uh markets out East India and maybe even turkey I'd put into the picture as well a large market for consumption in coins and bars right and youve you've talked a little about bit about the different eastern and western perspectives here and one thing that the report highlights that I thought was interesting was kind of an an interesting ter in their buying Behavior so in the report it goes into how usually Easter investors will sit on the sidelines when the price is higher


and we've kind of seen a reversal there and and vice versa for the Western investors so I wondered if you could go into into that yeah let me start with Western investors at pack a little bit of what I'm saying when I say that they're waiting for rates to move right now an investor in the US markets for example is looking at what they can earn on their cash and right now it's quite appealing to leave your money sitting in cash versus the expectation for Price earnings on gold now I think they've


been surprised to the upside because of the global nature of the demand for gold and I think that maybe they'll be keeping a much closer eye on how things develop over the course of the year because we're up nearly 14% year to dat now what's also interesting again is in the west when it was pure the East I should say in pure consumption terms you would have seen jewelry in China and India be a market that would tend to back off in terms of the overall demand com consumption when prices get higher


what ends up happening in that market is that they slow down the buying and what ends up happening is recycling takes off and becomes a more interesting Dynamic there but that's been a shift I think that with the economic Outlook in certain markets in particular China you seeing challenges around the property sector challenges around the equity sector and challenges around the currency sector and investors te teeing up gold as an asset to bring into their portfolio Holdings and again looking at


the Price Less so more important to them are the expectations of reserve and actually the expectations of holding on to their portfolio value and they're looking at gold and they're achieving it you know each of the currencies around the globe are seeing record prices for goal including in the r andb terms so I think that you're seeing that shift of a mentality of saying there's more room to go for gold and there's more opportunity for the upside so let's not back off at


these higher levels but when we do hit really peaking levels and most of that speculative push may have backed off some of the investment sentiment but you'll see that it comes back online when it troughs back off around 2200 a level like that in current environments will attract the investor flow okay and I think now I'm moving over to central banks so Central Bank buying we've been hearing about as a hugely supportive factor for for quite some time now and it looks like that continued certainly in q1 so I wondered


if you could go into that any highlights you would pull up there which countries are buying and what you're seeing there sure I think there's a really interesting story we've talked about it ourselves you and I this is a trend that we've seen now for 14 years and it's really gotten very substantial in terms of the amount of consumption that's coming from the central banks over the last three to five and I'd say to you that the story is pretty straightforward there is a watching and learn and actual


allocation to gold from the central banks particular the Emerging Market central banks whether that's China turkey India Poland Etc looking to add this element of of investment to their Reserve portfolio diversifying themselves away from any inflation risks they may have at home but also looking at the geopolitical landscape looking at their dependency on the US dollar and US dollar based assets the dependency on the Euro and ultimately how any Dynamic might play out over the course of now into next year as it relates to politics


geopolitics election outcomes and even something as broad as sanctions that could impact their ability to access their their funds when they need them so they're basically making a decision to say adding gold to my Reserve portfolio helps from a liquidity perspective helps from a diversification perspective and really does well to prevent any kind of systemic issues that could pop up whether it's geopolitical conflict driven or even sanction driven so there's a lot of strength to the story


and it continues to be a very very pronounced source of demand for gold and it's actually been very strong and typically we hear when it comes to central banks that they're price agnostic so they will buy gold no matter what the price is they don't minde that it's sitting at record highs right now do you find that still is I guess I guess you said it will continue to be strong but any any further points there well I think that what we can see from the flows I think that what you'll


find is that they might not necessarily be price agnostic but I think they're price sensitive and I think that when we've seen the prices come off we have seen the strong demand in particular in the OTC space step in and it's likely to be that these are the central banks that are making their moves at that point but I think overall uh most investors including central banks are probably looking at the prices and saying look if it's moving quickly let's take a step back in assess let's not get too ahead


of ourselves and if there's a moment for us to buy the correction a bit then we'll do that I think that every investor is looking at it right now and even in the context of going back to Western investors we're having a lot of discussions with them about the fact that we haven't missed out because the case for gold remains very strong so there's still upside potential okay very very good point and I wonder if there is anything more you might say on that that idea you haven't


missed out because I think that investors are perhaps looking at this and thinking okay what was this it well I think that right now what you're going to find is we're still waiting to see where monetary policy and its direction goes right now we continue to be in this more of the same waiting for a hard or a soft landing and I'm not going to tell you what the answer might be I have no idea trying to you know to to predict that right now but what I can say to you is that the case in a hard


Landing in the US in particular will be significantly strong for gold in uh in terms of the investment landscape you'll see Western investment dollars coming back to that very strong and even in the case of a soft Landing I think there still is the systemic risk issue that puts gold very prominently in position to be a component of a portfolio you might see more demand from Western investors in a hard Landing scenario you might see uh you know a steady demand in the case of a soft Landing I think we'll


get to that point at some stage I think that the fed's done an you know significant job of managing people's expectations so I think people need to keep an eye on the volatility of price it'll be a more of a vol ride for us for the next 6 months or so but we should see some sort of R move in the next 6 to 12 months and at that point I think you'll see that Western demand come online so if it when it go back to your point around is it too late or have we missed out the answer is no the


valuations there for gold continue to grow okay okay a very very good way to to summarize that point so I don't think that I usually ask you about technology demand for gold but I wanted to ask you briefly about it this time because I saw in q1 it was up 10% and part of that it looks like is due to the AI sector so I I kind of laughed at that a little bit because we hear how AI is now affecting everything and I thought to myself even gold so I wanted to get your take on that well gold is probably um without a


fail the the best conductor for electricity um I think what I'd say about technology is we are always at the heart of technological innovation gold is and then once technology gets developed and actually you know commoditized there tends to be a look for something that could be more costeffective to replace the gold as a component of technology so when it comes to supercomputer powering and it comes to the the the different uses in electronics um we're going to definitely see increases and levels of demand


that'll actually show up in the technology space it's it's a small component but it's actually interesting and I'm glad you did notice that the techn techology that pick up over the course of this quarter and it's actually been a strong performer for gold now is it spe specific and exclusively related to AI I'm not entirely sure that we can attribute all of that to AI but what we can say is that again gold will always feature in technology whether it's nanop particles or supercomputing and I think


that just keep an eye on the space because it is that diversifier away from just a monetary nature of gold that we often talk about or the consumer nature where where people are looking for jewelry and and other um uh you forms of holding gold yes certainly that makes sense and although the report mainly focuses on the demand side there is there is a point on Supply and I was going to ask you about M Supply so it looks like it reached a a q1 record for this year and we might be on track for 2024 record


perhaps we don't know yet but are is that miners responding to these higher prices or more assets coming online what's going on there I think they're hitting Peak Performance in terms of getting their production online and getting it into the markets and they're definitely making the most of what they can at this stage in terms of higher prices and that demand that's been so strong on a global scale so it's been an excellent um quarter for for the mining and and I actually probably


should have started by saying even with a record demand for Supply coming online and really significant numbers in recycling we're still seeing record overall consumption on the part of the gold market which is a really good story so you see miners seeing the benefits of it and you see recycling fueling into the demand and ultimately those demand numbers are continuing to be strong so again a good quarter for the miners you know we've talked about 2024 and 25 being years when the production will


come online it's longer out that we have to keep an eye on and see how things can develop in that regard okay and as as we're finishing up any other points you would mention from the report or elements that you think investors should be watching when it comes to gold as we move forward into 2024 because it's been quite interesting so far I think it's a really interesting time you know I always remind people never underestimate the the risk of a systemic event whether it's geopolitical


or or whatever the case may be but keep that in mind don't overlook the fact that there's a lot of pressure on financial institutions Banks Etc but what I'd also add and make sure people pay close attention to is that there's an election year taking place in the US now it might not immediately impact overall demand as a result of the potential for outcome but this is really a huge Dynamic that's playing out as it relates to policy shifts that could be developing and the ability for the us to


have policy and fiscal policy managed effectively fiscal challenges for the US are still very very significant and when people start to have a real appreciation for what that looks like can it sustain its levels of debt can it continue to raise taxes and get about funding and can it step in as a global leader to to to back the needs of of policing the the you know the the the hotpots around the globe these are Big pressures on the US economy right now and the US fiscal system Cann it handle it and that might


mean that we need to keep a very close watch on how that develops what that means for the dollar and what that ultimately means for Demand on on a global basis for people diversifying away from the US dollar or dollar assets so again an an environment that could lead to increased and ongoing demand from central banks and and forign investment okay definitely we'll continue to follow up on those points as we go through the year with you that was great we'll wrap it up for now but thank you so much for coming on to over what's


going on in the gold market and of course the the latest report well thanks for having me Charlotte it's always great to be here of course and once again I'm Charlotte McLoud with investing news.com and this is Joe Katon with the world gold Council thank you for watching if you like this video make sure you subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below we'll see you next time [Music]