Gold, a symbol of tradition and value across cultures, is not just a commodity but a cultural icon. Its significant increase in production and consumption over time culminated in an all-time high of 896 tonnes of gold production in Q1 2024. The surge in Over-the-counter (OTC) sales, jewelry consumption, and central bank buying indicates the rising global demand for gold.
Asia, particularly China and India, dominate the global gold consumption market. In China, there is a shift in consumer preference for lightweight designs with low labor costs. Surprisingly, rural India accounts for 60% of the country's gold consumption. The market's unique sensitivity to monsoon rains, agricultural produce, and harvest income adds a complex and fascinating dynamic to its consumption pattern. The significant growth in the demand for gold in these regions is a promising sign for the global gold market.
The US remains a significant gold consumer in North America, though jewelry demand has declined in recent years due to consumer preference and economic conditions. Canada continues to be a stable gold market. In South America, the spending on gold is lower than in Europe and Asia. Brazil leads in gold consumption for investment and jewelry, followed by Peru and Colombia, which have growing gold markets, often linked to their domestic mining industries.
In Europe, gold is purchased for investment purposes rather than jewelry. Switzerland, in particular, stands out for its high per capita consumption of gold, with a preference for bars and coins over jewelry. Germans invest in gold as a safety net to weather challenging economic conditions. The UK and other Western European countries follow a similar consumer pattern of purchasing gold for investment rather than jewelry.
The Middle East, with the United Arab Emirates (UAE) as a critical player, reflects strong gold purchasing patterns. Dubai is particularly famous for its spectacular gold souks and robust jewelry market, showcasing the region's significant role in the global gold market. Turkish people also have a strong affinity for gold and purchase it to protect against inflation. Other Gulf countries, like Saudi Arabia, Oman, and Kuwait, have high gold consumption patterns for investment and jewelry.
The consumption of gold varies widely on the African continent. Though they are major producers of gold, they consume it modestly compared to their production levels. Egypt is notable for being the most significant gold consumer in North Africa and for having a deep cultural connection to gold jewelry. Although gold consumption in West African nations like Ghana and Nigeria is usually lower than in Asia or the Middle East, these markets are expanding.
The trends of gold consumption in Australia and Oceania are unlike those in other areas. Australia, a significant gold producer, has comparatively low domestic gold consumption, preferring to invest in gold rather than jewelry. Although certain Pacific Island cultures value gold highly, New Zealand and other Pacific Island countries use very little gold compared to different locations.
Gold's usage in electronics and other technical applications is growing, giving another dimension to world demand even though it is less than the demand for jewelry or investments. Though the popularity of gold as an investment or jewelry varies worldwide, it's crucial to remember that gold investment should be limited to 10% for a balanced and diversified investment portfolio.
Gold consumption is influenced by market pricing, cultural preferences, economic and geopolitical situations that affect the demand for gold. The value civilizations have placed on this precious metal will change with time and evolution. Gold will continue to play a significant role in the international economy for a long time.
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