As gold prices continue their steady ascent, demand for bullion bars, coins and stocks should surge further in the coming months as gold fever spreads to the masses.
The World Gold Council in its latest quarterly report revised its outlook for gold investment demand upward, citing the “surprising pace” of gold exchange-traded fund (ETF) accumulation in the third quarter.
Gold ETFs, publicly traded stocks that track the price of gold by holding physical bullion or stakes in mining companies, have exploded in popularity this year.
“Investors remained firmly in the driving seat in [the third quarter],” reads the report, which highlighted huge ETF buying during the third quarter and, for the first time since 2013, a fourth consecutive quarter in which bar and coin demand remained above 300 tonnes.
As gold ETFs make exposure to the metal’s rallying price more accessible, scores of new buyers could still hop on to the bandwagon, underscoring the council’s expectation that demand will continue to grow this year, unfazed by the elevated price.
“As a share of general portfolios, gold remains underallocated, and a flood of new investors could easily push holdings through the previous peak given the strategic case to do so remains solid,” said the council.
Demand for the precious metal surged to 1,313 tonnes (valued at $146bn), the highest quarterly total yet, in the third quarter as more investors and central banks moved to shield their portfolios from trade wars and policy uncertainty.
With prices touching 45 fresh record highs this year, the safe-haven metal is caught in a self-reinforcing rally. Each price surge attracts more buyers, fuelling the next climb.
Investment demand has replaced central bank buying as the main driver of gold demand this year, accounting for more than half of total demand in the first three quarters compared with less than one-third last year.
The council’s report shows that central banks, the primary drivers of gold demand between 2022 and 2024, also increased their buying pace in the third quarter.
Wars in the Middle East and Europe, US President Donald Trump’s hostile trade policies and concerns over the health of the world’s largest economy pushed purchases by monetary authorities up 28% quarter on quarter, with year-to-date demand sticking well above the pre-2022 average.
It’s great news for SA’s major miners, who have enjoyed huge buying sprees over the past year.
With platinum prices staging a huge turnaround in recent months, soaring precious metal prices continue to boost the share prices of mining majors, strengthening the rand and helping the all share index to rally more than 30% this year.
It’s a boon for the fiscus as well, as rising revenues boost gold miners’ tax contributions and spur deal-making activity.
The soaring price is likely to help offset the expected 28% year-on-year decline in mining industry corporate tax collections and R4.6bn drop in mining and petroleum royalty revenue, which the Treasury warned of earlier this year, based on provisional tax data in the National Budget.
The PwC “SA Mine 2025” report shows SA gold producers recorded a 22% year-on-year jump in revenue to R132bn in the year to end-June, despite the mining sector’s overall revenue being flat year on year.
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