1 August, 2023

Weak demand for gold in the technology sector continued into Q2, but early indicators of a potential recovery are emerging

  • Gold used in technology during Q2 fell by 10% y/y to 70t, finalising a very weak H1 demand of 140t – the weakest H1 in our data series
  • The electronics sector, which dominates technology demand, fell 12% y/y to 56t
  • Other industrial applications recorded a marginal 1% y/y increase to 12t, while dental demand continued its long-term decline, falling 10% y/y to 2t.
TonnesQ2'22Q2'23 y/y change
Other Industrial11.411.61%

Source: Metals Focus, World Gold Council

The weakness in gold demand in industrial applications carried into Q2 as surging inflation rates continued to severely impact the entire electronics supply chain, from chip manufacturers to end-users. H1 total demand of 140t is notably low, below even the COVID-impacted H1 of 2020. However, there are indications that Q2 may represent the low point of the downturn, with H2 expected to see some recovery as new products are launched and manufacturing ramps up to more normal levels.


Gold used in the electronics industry fell again in Q2, with significant y/y declines registered across all applications. Mirroring Q1, these falls were a direct consequence of weak end-user demand for consumer electronics – the major demand area for gold in electronics applications. This has led to negative shipment forecasts for most major device categories in 2023, including smartphones, PCs and laptops. And the weakness is reflected in chip manufacturer financial reports: Samsung, for example, recently reported a 96% fall in second quarter operating profit 1. However, the same forecasts suggest a 2024 recovery in; smartphone2 and PC and laptop3 shipments, with Gartner stating that “PC inventory will normalise by the end of 2023, and PC demand will return to growth in 2024”.

Gold used in Light Emitting Diodes (LEDs) fell y/y during Q2. Demand for LEDs was generally weak compared with Q2’22, in response to constrained consumer electronics buying. But backlight applications experienced some q/q recovery thanks to stronger orders from brand manufacturers preparing for mid-year promotions and product launches. Demand from the automotive sector remained steady and the longer-term outlook is fairly positive, with increasing adoption of both backlights and sensors to enable the next generation of in-vehicle functionality. Once again, the threat from mini-LED technology (which typically uses less gold than traditional LEDs) again had only a limited impact on the wider sector due to high implementation costs for manufacturers.

Printed Circuit Board (PCB) demand recorded both y/y and q/q declines during Q2. Weak consumer electronics demand continued to hit the PCB sector hard, with fabrication utilisation rates reportedly falling to lows of 60-65% during the quarter. However, this is forecast to recover to ~70% during Q3. Additionally, sanctions, rising labour costs and more stringent environmental controls in China are leading to notable transfers of manufacturing to other SE Asian countries4.

Memory chip demand also fell during Q2. Memory manufacturers are focusing on supply control, as device manufacturers have taken advantage of this period of low prices to retain relatively high inventories. Fabrication utilisation rates were 75-80% during the quarter, and are unlikely to return to full capacity before the end of 2023. Like other key sectors, the current weak levels of consumer electronics demand overshadow the overall demand picture. There are other growing sources of demand, such as AI servers and graphic memory, but at present these remain much smaller than consumer electronics and fail to compensate for the weakness in that dominant market segment.

The wireless sector saw similar Q2 weakness, but recorded a notable q/q increase. The quarterly jump was due to manufacturers replenishing inventories ahead of the upcoming peak season, when promotions and device launches will be prominent. However, there is uncertainty as to whether this improvement will continue into the second half of the year as it is thought to be based on short term orders.

At the aggregate level, three of the major electronics fabrication hubs around the world recorded a y/y fall in gold demand during Q2: Japan (-19%), South Korea (-32%) and the US (-9%), while mainland China and Hong Kong SAR together registered a small increase of 5%. 

Other industrial and dentistry

Q2 saw a rise of 1% y/y, due primarily to growth in the luxury accessories / plating sector Italy and China. The former swung back to gains as the luxury accessories sector grew at a faster pace than forecast, while China enjoyed a post-COVID rebound. But these rises were largely undone by losses in India. Demand in the dental sector remained weak, falling 10% y/y during the quarter as high metal prices accelerated substitution and as last year’s post-COVID rebound in the number of treatments carried out faded.

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