Overview

The gold market is currently witnessing a change in trends, with a decline in central bank transactions coupled with a rise in demand from exchange-traded funds (ETFs) and gold-backed cryptocurrencies. This burgeoning interest has resulted in a significant increase in minting volumes, reaching the highest level observed in three years.

• Total gold demand for the first quarter hit the highest level in nine years due to surging investment and bar/coin purchases.
• Gold ETFs captured a notable increase in investments, while gold-backed cryptocurrencies experienced a revival, with a 77% rise in monthly transfer volume.
• Despite averages soaring, gold prices dipped slightly last week.

Key Insights

According to data from rwa.xyz, over $80 million worth of gold-backed tokens were minted during the past month, driving the market capitalization of these assets up by 6% to $1.43 billion. Additionally, the monthly transfer volume increased by 77% to $1.27 billion, signaling a reinvigorated interest in digital assets linked to gold.

This activity parallels a broader gold market trend, as indicated by the World Gold Council’s recent report, which states that gold demand rose to 1,206 tonnes in Q1, reflecting a 1% increase year-on-year and marking the strongest first quarter since 2016. This increase happened even as central bank purchases slowed to 244 tonnes, a drop from the previous quarter’s 365 tonnes.

Gold ETFs have been instrumental in driving this shift, with investment demand doubling to 552 tonnes, pointing to a migration toward gold, which historically benefits from such dynamics.

The average gold price surged to an unprecedented $2,860 per ounce, up 38% from last year, though it faced a slight decline of 2.35% last week. Current trading values signal a spot price of gold at $3,240. Traditional demands, particularly in jewelry, witnessed a downward trend, declining to pandemic-era lows, whereas the demand for bars and coins remained robust, especially within China.