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Demand for Gold in Tech Sector Grows for Seventh Straight Quarter

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Gold demand in the technology sector grew for the seventh consecutive quarter according to the World Gold Council’s Gold Demand Trends Q2 2018 report.

Demand for gold in tech grew 2% overall to 83.3 tons last quarter.

Electronics demand grew 3% on a yearly basis, underpinned by strong demand from memory, wireless and printed circuit board (PCB) sectors.

Overall gold demand was down about 4% in Q2 2018, primarily due to slowing inflows of metal into gold-backed ETFs.

The wireless industry led the way in tech demand for gold, jumping by 8 to 12% year-on-year despite this typically being the slow season for smartphone sales. Strong demand from power amplifiers used in 5G infrastructure and 3D sensors in VR gaming systems and automobiles pushed overall demand for the yellow metal in the tech sector higher. According to the WGC, the industry currently can’t meet the very strong demand for 3D sensors by supply, boding well for the short to mid-term.

Market dynamics remain positive for gold usage in the memory sector as well.

Increasing output of NAND has driven prices down, and with major manufacturers such as Samsung and SK Hynix ramping up capacity over the coming couple of years, NAND flash prices are forecast to cool further. This should drive wider adoption of solid-state drives in notebooks, thereby supporting gold volumes. DRAM continued to benefit from strong demand, particularly in the server market, which has been boosted by healthy demand for big data and cloud services.”

Over the past decade, the tech sector accounted for more than 380 tons of gold demand annually. That’s 13% ahead of central bank purchases during the same time period.

As we reported recently, demand for gold in the healthcare field is also growing quickly. And just last month, researchers developed a gold nanoparticle that could open the door to improving the storage of solar energy.

Tech demand for both gold and silver will likely continue to increase over the next several decades. This could have a significant impact on overall demand for these precious metals. Silver demand has always been heavily influenced by industrial use, but gold is becoming more and more important in industry, especially in high tech applications.

Other Highlights from the WGC Q2 Gold Demand Report

The drop in overall gold demand in Q2 was primarily a function of comparison. While gold continues to flow into ETFs, it has slowed to a trickle compared to last year. Jewelry, bar and coin demand were all relatively flat.

ETFs – Inflows were 46% lower y-o-y. European-listed funds saw decent inflows, but holdings of North American-listed funds fell by 30.6 tons as investors focused on domestic economic strength.

Jewelry – Despite the Q2 decline, H1 jewelry demand was scarcely changed at 1,031.2 tons. Weaker demand in India and the Middle East during Q2 was partially offset by growth in China and the US.

Coin and Bar – Global bar and coin investment remained virtually static at 247.6 tons. Stronger demand in China and Iran were offset by falls in Turkey, India and Europe, where local prices remained elevated.

Central Banks – Central banks added 89.4 tons of gold to global official reserves in Q2, down 7% y-o-y, but cumulative H1 purchases of 193.3 tons were the highest since 2015.

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