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Beijing Business Daily (Reporter Li Haiyan) Global gold demand was strong in the second quarter. On July 30, the World Gold Council released the "Global Gold Demand Trends Report" for the second quarter of 2024 (hereinafter referred to as the "Report"). The "Report" shows that due to the surge in over-the-counter transactions and the continued gold purchases by global central banks, the total global gold demand including over-the-counter transactions in the second quarter increased by 4% year-on-year to 1,258 tons, setting the strongest second quarter demand record since this statistic was recorded. Among them, the demand for over-the-counter transactions was strong, with a significant year-on-year increase of 53% to 329 tons, providing support for global gold demand.

Gold has both investment and reserve functions. In recent years, the central bank's demand for gold has always been an important driving force for the gold market. The report shows that global official gold reserves increased by 183 tons in the second quarter, a year-on-year increase of 6%, which is slower than the growth rate in the first quarter.

However, global demand for gold investment remains strong. Affected by high gold prices, global demand for gold jewelry fell 19% year-on-year to 391 tons in the second quarter. However, compared with the same period last year, total demand for gold jewelry in the first half of this year remained resilient, mainly due to higher-than-expected demand for gold jewelry in the first quarter. At the same time, driven by the boom in artificial intelligence, gold consumption in the electronics industry increased by 14% year-on-year in the second quarter, which in turn drove global demand for gold in technology up 11% year-on-year to 81 tons.

Gold demand is closely linked to gold price trends. Looking back at the international gold price trend this year, London spot gold and COMEX gold futures have been in a bull market since late February, and hit record highs several times in March, rising from $2,100/ounce to $2,200/ounce. Until early April, London spot gold and COMEX gold futures broke through the $2,300/ounce mark, and on April 12, they continued to hit record highs, reaching the $2,400/ounce mark. Entering May, the international gold price ushered in another "highlight" moment. On May 20, London spot gold and COMEX gold futures hovered around the $2,450/ounce mark, surpassing the intraday high record set in April.

However, after rising to a small peak in May, the international gold price entered a quiet period in June, falling back to the $2,300/ounce mark, and then returned to an upward trend in late June. On July 17, London spot gold and COMEX gold futures continued to hit record highs during the session, once exceeding $2,480/ounce, and then fell back to consolidate. After falling below the $2,300/ounce mark on July 25, it rebounded. As of press time on July 31, when the Beijing Business Daily reporter was writing this article, London spot gold and COMEX gold futures were quoted at $2,421.53/ounce and $2,467.07/ounce, respectively.

"The main reasons for the rise in gold prices in the second quarter are geopolitics, military conflicts and investors' expectations that the Federal Reserve's monetary policy may shift." Wang Hongying, director of the China (Hong Kong) Financial Derivatives Investment Research Institute, said that the geopolitical situation has prompted safe-haven funds to flow into the gold market; at the same time, against the backdrop of sustained economic growth, the Federal Reserve's monetary policy may turn to neutral or even cut interest rates because excessively high interest rates will inhibit economic growth. These are the main reasons for the rise in gold prices in the second quarter. However, due to the previous surge in gold prices, which continued to break through historical highs, the selling of profit-taking has led to a short-term technical correction in gold, but the structural strength of the gold market is still continuing, so the current gold price remains relatively stable.

Looking ahead, industry insiders predict that gold prices still have room to rise. Wang Hongying pointed out that on the one hand, the sharp expansion of global debt levels will lead to a continued rise in gold prices; on the other hand, geopolitical conflicts are still ongoing, which is also the main factor affecting the long-term structural rise of gold. In addition, in the short and medium term, against the background of global currency over-issuance and credit expansion, central banks of various countries will hold gold as a pricing anchor for their own currencies. At the same time, with the development of the smart technology industry, the scale of gold used in the global technology industry will also show a structural increase.

"Returns and risks coexist. When gold prices are high, investors are advised not to blindly chase high prices. It is a more stable investment strategy to wait for a pullback to buy gold bars, gold ETFs, and gold-related stock assets," Wang Hongying suggested.

"From the perspective of medium- and long-term supporting factors, the logic of global central bank gold purchases, commodity properties against inflation, and the Fed's interest rate cuts is still in the process of interpretation. There is no sign of reversal for the time being, and we continue to be optimistic about the future trend of gold." Xue Hongyan, deputy director of the Xingtu Financial Research Institute, said that gold, as a highly volatile asset, is only suitable for investors with medium- and high-risk preferences. Investors should consider rationally based on their own risk preferences, financial planning, and fund attributes. If you are willing to accept the high volatility of gold assets, investors can choose paper gold, gold ETF linked funds, etc. through bank channels for investment. When buying, avoid following the trend and chasing high prices. When prices enter the adjustment stage, you can make arrangements at low prices.