Industrial Demand for Gold Continued to Rebound in Q1

Back in 2019, CNBC commentator Jim Leventhal said he had no interest in gold because it has no uses as a metal. This comment was a real head-scratcher because, besides its extensive use in jewelry, gold is an increasingly important industrial input, particularly in the technology sector.

Gold demand for industrial uses came in at 82 tons in the first quarter of 2022, continuing the recovery we saw in late 2021. That was a 1% year-on-year increase and the highest Q1 total since 2018. This despite continuing headwinds as the electronics sector struggles to recover from the economic lockdowns during the COVID-19 pandemic.

The electronics sector dominates industrial demand for gold, accounting for 67 tons in Q1. Other industrial applications used 12 tons of gold and dentistry accounted for 2.7 tons of demand.

Demand for big-ticket items such as vehicles and high-end consumer electronic devices showed continued strength in the first quarter, although chip shortages that have plagued much of the sector continue to put a damper on automotive sales.

Demand for Printed Circuit Boards (PCBs) was also healthy during Q1. Some of this was due to order deferrals from the last quarter of 2021. The surge in orders led to deliveries spilling over into Q1’22. However, new demand was also solid with servers, routers and high-speed computing sectors all experiencing growth.

Other electronics applications for gold include memory chips, light-emitting diodes (LEDs), and the wireless communications sector.

In 2021, tech sector gold demand grew by 9% to 330 tons with year-on-year growth in all four quarters, according to data from the World Gold Council. Tech demand in 2021 was about equal to pre-pandemic levels in 2019.

Industrial demand pales in comparison to the demand for gold in jewelry making and for investment purposes. Nevertheless, gold is one of the most useful metals on the planet and would probably have even more practical applications if it wasn’t so rare and expensive. The truth is gold did not become money because it wasn’t useful for anything else. Its role as money actually evolved because it is so valuable and has so many uses.

For instance, gold was an integral component in the mirrors on the recently launched James Webb Space Telescope (JWST).

Gold has also enjoyed a growing role in healthcare. The yellow metal is used in a large number of diagnostic tools and is of increasing interest to companies developing innovative new ways to treat disease.

Some uses for gold in medicine sound like something right out of a science fiction film.  A team of Chinese researchers announced they were able to partially restore the sight of blind mice by replacing their deteriorated photoreceptors – sensory structures inside the eye that respond to light – with nano-wires made of gold and titanium.

Ultimately, gold is money, but it serves many other useful purposes and that’s part of what gives it enduring value.