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Technology Embraces Gold After Six Years Of Decline

Kitco News

Technology Embraces Gold After Six Years Of Decline

(Kitco News) - The technology sector is finally showing some love for gold, as more smartphone makers are upping their use of the yellow metal in their products, the World Gold Council (WGC) said in its latest report.

Interest in the precious metal by the technology sector is up for the first time in six years, the WGC said in its ‘Gold Demand Trends Q3’ report.

Total tech demand was up 2% at 84.2 tonnes in Q3 – a fourth quarterly advance in a row. The increase brought this year’s number to 244.4 tonnes, marking the first annual rise since 2010.

“Since 2010, technology manufacturers have gone through an exercise of thrifting – that has eroded gold use in tech,” Alistair Hewitt, head of market intelligence at the WGC, told The Telegraph.

This trend is now reversing, with smartphone makers seeing the benefits of using actual gold.

“Gold has certain features that means it lends itself really well to tech,” Hewitt said. “It’s highly conductive, it doesn’t corrode or tarnish, and it’s highly malleable.”

The main driver for gold demand is in smartphones’ memory chips, which are in short supply and require gold to make bonding wires.

“Continued strength in the memory sector – where supply remained very tight and demand high – underpinned a 12 to 15% increase in demand for gold bonding wire in Q3,” the report said.

On top of that, the WGC estimates a prolonged shortage in memory chips throughout next year, which should reflect positively on gold.

Within the technology sector, gold is also popular when making LED displays and 3D sensors, including facial recognition software developed for the new iPhone X.

Overall, global gold demand did not fare too well in Q3, according to WGC. Lackluster investor interest in North America and declining jewelry sales in India weighed heavily on quarterly numbers.

From July to September, gold demand dropped to 915 tonnes, a 9% decrease compared to the third quarter of 2016. Year-to-date, total gold demand was down 12% so far in 2017.

But, the WGC advises to look past the headline figure, highlighting robust strength in the market.

“Despite the rise in interest rates and the rally in stock markets, gold continues to be bought by investors. They still see value in gold and see it as an inexpensive way to buy portfolio protection,” Juan Carlos Artigas, WGC's director of investment research, told Kitco News. “The gold market is global and that gives it depth and robustness.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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