Gold Demand Trends Full Year 2016
Published 3rd February 2017
Gold demand in the technology sector declined 3% in 2016, as Q1 weakness weighed on performance.
- Electronics demand fell 3% in 2016: first half losses outweighed end-of-year recovery
- Annual demand declined in both the ‘other industrial’ and dental segments; Q4 saw an upturn in other industrial demand
Despite an upturn late in the year, annual demand for gold in technology fell 3% in 2016, from 332.0t to 322.5t. Q1 weakness, caused by global economic uncertainty, higher gold prices and substitution, squeezed the full year total. Q4 was a bright spot, though: quarterly demand hit its highest level since Q2 2015.
Gold used in electronics rose 4% y-o-y to 66.9t in Q4, boosted by increased demand for gold bonding wire and Printed Circuit Boards (PCBs). While demand slowed in the LED and wireless sectors, rampant growth in the gold bonding wire and PCB industries lifted the quarterly total to positive territory.
Gold bonding wire benefited hugely from more widespread use of fingerprint and iris sensors. The latest smartphone models released by Samsung and Huawei use biometric data from eye scanning to enhance security and are widely regarded as industry trend setters. As a result, sensor makers in mainland China, Taiwan and South Korea were operating at full capacity and have since increased both prices and lead time to meet demand.
Gold used in PCBs grew in line with increased smartphone shipments in Q4. The impact of the growth in High Density Interconnects (HDIs), which reduce the volume of gold used in PCBs, was outweighed by the growth in shipments.
Demand from the LED and wireless industries paled in comparison. Increasingly, LED manufacturers are adopting more advanced packaging technology in vehicle lighting. Chip Scale Packaging (CSP), which can more easily withstand a vibrating environment, has size reduction and cost saving advantages. This miniaturisation reduced gold volumes. The wireless sector, on the other hand, slowed down largely due to seasonal factors.
More new uses of gold are being uncovered. Researchers from the Israel Institute of Technology have developed sensors made from gold nanoparticles, which can be used to identify different diseases from a simple breath test. Varying amounts of 13 volatile organic compounds are present in illnesses such as lung cancer and Parkinson’s disease. The Institute’s sensors could identify the specific disease 86% of the time after allowing for factors such as age and gender. Although not yet accurate enough for use in real-life diagnoses, there is genuine potential for this new technology to be an efficient, non-invasive way of detecting early-stage disease.