Gold Demand Trends Q3 2016

8 November, 2016


Gold demand in the technology sector improved from Q2 as conditions recovered in China and South Korea, but still registered year-on-year marginal decline.

Tonnes Q3'15 Q3'16 YoY
Technology 82.8 82.4 -1%
Electronics 65.5 65.1 -1%
Other Industrial 12.6 12.8 2%
Dentistry 4.7 4.4 -6%

Demand for gold in the technology space stood at 82.4t in Q3, a small uptick on the previous quarter but still 1% lower than Q3 2015. Growth from a stronger performance in gold bonding wire and the LED industry was undone by weakness in the wireless sector.

Electronics demand dragged by weaker wireless sector

Gold used in electronics dropped 1% year-on-year to 65.1t in Q3 2016. Improved demand from the gold bonding wire and LED industry were offset by a drop in the order book of a key wireless manufacturer and a muted response from the Printed Circuit Board (PCB) industry to high smartphone shipments.

Gold bonding wire consumption recovered in the third quarter on strong demand for mobile memory packages, fingerprint sensors and flash memory chips. Production growth of Chinese branded smartphones, such as Huawei and Xiaomi, is likely to underpin demand in Q4.

In addition, the LED industry used 6% more gold in Q3 year-on-year as utilisation rates reached more than 90%, compared to 60–70% in Q2. As LED chip makers diversify into new fields such as the agricultural and horticultural segments for higher margins, gold volumes are likely to receive further support from these areas.

But weaker than expected performance from the wireless sector and technological advances in PCB manufacturing has undermined the demand for gold. A decline in the order book at one Taiwan-based semiconductor company has cut 2% off the region’s industrial consumption of gold. Moreover, as PCB makers embraced High Density Interconnects (HDIs) that reduce the unit area of PCBs, uses of gold by this sector stayed flat despite higher smartphone shipments.

More ways to recover and use gold developed

Researchers at the University of Edinburgh in Scotland have developed a technique to recover gold from e-scrap that could reduce usage of hazardous chemicals 1. The process involves submerging circuit boards in a mild acid and then adding a compound to extract gold selectively from the mixture of other metals. It is claimed that this method could be more efficient in recovering gold than current methods.

Midatech, an international specialty pharmaceutical company, announced that it has started a Phase 1 study of a type 1 diabetes vaccine using gold nanoparticle (GNP) technology, the first such product to be used in humans. The GNPs help to reduce the body’s immune response against insulin-producing cells.2

Slight gains in other industrial uses of gold cancelled out by further dental declines

Industrial demand in Q3 inched up by 2% year-onyear, from 12.6t to 12.8t. This was largely thanks to an increase in plating demand in India. The festive season saw an increase in demand for gold-plated articles, particularly images of gods and goddesses. Also, slight growth in demand for gold-plated jewellery – and even the introduction in gold-plated silver jewellery at one or two stores in Southern India – was a consequence of the persistently high gold price.

Gold used in dentistry fell another 6% year on year to 4.4t in Q3. Demand is expected to fade further as the industry and consumers turn to ceramic materials for cosmetic reasons.

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