(Kitco News) – ETF demand for gold rose in Q3, partially offsetting declines from central banks and jewelry buyers, while global silver production is getting a boost from Peru, according to precious metals analysts at Heraeus.
In their latest precious metals update, the analysts noted that investors’ renewed interest in gold ETFs helped prop up gold demand during the third quarter.
“Total gold demand was 1,176 t in Q3’24, up sharply from Q2’24, but down slightly from Q3’23,” they wrote. “Investment demand was particularly strong. Bar and coin demand was down 9% year-on-year but ETFs, showing the first positive quarter since Q1’22, gained 95 t. Overall investment demand was 364 t, more than double the, admittedly quite low, Q3’23 total.”
Gold ETFs have added another 0.9 million ounces in October, bringing their total holdings to 84.1 million ounces.
The analysts also saw central bank demand easing during the same period, however. “Central banks added 186 t to their reserves, significantly lower than in Q3’23,” they said. “After three quarters the total so far this year stands at 694 t. For the year as a whole, central bank buying may not match last year’s total, but it could still be the third-highest year after 2022 and 2023.”
Jewelry consumption also fell by 12% annually, totaling 459 tonnes for the quarter, with the analysts seeing high bullion prices dampening demand. “Indian buyers bucked the trend as a cut in import duties helped to offset the price rise,” they said. “It will be interesting to see if that strength has held into October, with Diwali last week being an auspicious time to buy gold.”
Looking at the futures market, the analysts noted that speculative futures positioning rose to a net long 29.6 million ounces. “Although that is not quite as high as it was in mid-September, it is still very elevated by historical standards,” they said. “Gold was also overbought and the price and RSI are showing divergence so a pullback and period of consolidation would be normal.”
Gold prices spiked to $2,750 in the spot market just after 9:30 am EST, but pulled back just as sharply afterward. Spot gold last traded at $2,736.90 per ounce for a nearly flat performance of +0.01% on the session.
Turning to silver, Heraeus said that Peru’s silver production may beat estimates in 2024 after Buenaventura’s silver output shot up.
“Buenaventura has significantly increased its silver production to 11.5 moz in the first three quarters of the year,” they wrote. “Overall, the company is expected to produce 14.5-16.0 moz this year. The company has restarted two existing mines and is ramping up a new mine, Yumpag, which is expected to deliver 7.5-8.0 moz of silver this year. However, having already produced 6.0 moz in the first three quarters, Yumpag could exceed guidance and hit 8.5 moz this year.”
They noted that Peru was the third-largest silver producer in the world last year, with a total output of 107.1 million ounces.
Silver hit a high of $32.908 in the spot market just after the North American open on Tuesday, and it continues to trade near the top of its daily range.
At the time of writing, spot silver last traded at $32.744 per ounce and is up 0.95% on the daily chart.
