*

Gold jewellery consumption lost 19% amid high prices

*

Inlcuding OTC, total demand was the strongest for Q2

*

Central banks demand rose, outflows from ETFs slowed

sharply

*

Mine supply hit Q2 record, recycling rose to 12-year high

By Polina Devitt

LONDON, July 30 (Reuters) - Global gold demand excluding

over-the-counter (OTC) trading fell 6% year-on-year to 929

metric tons in the second quarter as jewellery consumption

tumbled 19% amid high prices, the World Gold Council (WGC) said

on Tuesday.

Spot gold prices are up 15% so far this year after

hitting a record high of $2,483.60 on July 17 amid increased

market expectations that the U.S. Federal Reserve will cut

interest rates in September.

The second quarter "saw price sensitivity bite into

jewellery demand and it may be a while before consumers fully

adjust to higher prices", said the WGC, an industry body whose

members are global gold miners.

Gold jewellery consumption in April-June saw its weakest

second quarter since 2020, when demand was feeling the worst

impact of the COVID-19 pandemic, the WGC said.

However, total demand including the opaque OTC trading rose

4% to 1,258 tons, marking the strongest second quarter in the

WGC's data series going back to 2000.

The WGC estimates the OTC flows - investment from

institutional, high-net-worth investors and family offices - at

329 tons, the strongest since final quarter of 2020.

"Demand from this sector has been in response to concern

over the U.S. debt burden, geopolitical risks and attraction to

the strong price rise," it said.

Global central banks, which actively bought gold in

2022-2023, increased purchases for their reserves by 6% to 183

tons in the second quarter. They are on track to slow buying in

full-2024 by 150 tons from 2023 but to keep them above the

pre-2022 level.

Physically-backed gold exchange traded funds (ETFs) saw

modest outflows in the second quarter and were heading for the

third consecutive month of net inflows in July.

Bar and coin investment fell 5%, while demand for gold in

technology rose 11% "driven by the AI boom in the electronics

sector", the WGC said.

On the supply side, mine production increased by 3% to the

second-quarter record, while recycling rose by 4% to the highest

for a second quarter since 2012.

Gold supply and demand by WGC*:

Q2 2023 Q1 2024 Q2 2024 Q2

change

y/y (%)

Supply

Mine production 899.7 859.1 929.1 3

Net producer hedging -15.7 -24.5 -6.3 -

Recycled gold 324.0 348.5 335.4 4

Total supply 1,207.9 1,183.1 1,258.2 4

Demand

Jewellery fabrication: 494.1 534.4 410.6 -17

- Jewellery consumption 479.4 479.1 390.6 -19

- Jewellery inventory 14.7 55.2 20.0 36

Technology: 72.8 80.5 81.1 11

- Electronics 59.1 66.4 67.6 14

- Other industrial 11.3 11.8 11.3 0

- Dentistry 2.4 2.3 2.3 -5

Investment: 252.6 200.4 253.9 1

- Total bar and coin: 273.7 313.4 261.0 -5

of which bars 164.0 223.3 183.6 12

of which official coins 85.3 66.0 52.7 -38

of which medals 24.4 24.1 24.8 2

- ETFs/similar products -21.1 -113.0 -7.2 -

Central banks, other inst. 173.6 299.9 183.4 6

Gold demand 993.1 1,115.2 929.0 -6

OTC and other 214.9 67.9 329.2 53

Total demand 1,207.9 1,183.1 1,258.2 4

LBMA gold price ($/oz) 1,975.9 2,069.8 2,338.2 18

* Source: Metals Focus, Refinitiv GFMS, ICE Benchmark

Administration, World Gold Council.