Gold Demand Trends Q3 2017

Published 9th November 2017

Technology

Gold used in technology extended its recent recovery

  • Strong momentum in memory chip demand led to another quarter of double-digit growth 
  • Automobile applications generated increased demand for LEDs
  • Wider application of 3D sensors boosted gold demand from the wireless sector
Tonnes Q3'16 Q3'17 YoY
Technology 82.6 84.2 2%
Electronics 65.3 67.3 3%
Other Industrial 12.8 12.8 0%
Dentistry 4.5 4.2 -7%

Technology demand stood at 84.2t in Q3, 2% higher y-o-y and the fourth consecutive quarter of growth. Year-to-date demand reached 244.4t, up 2% over the same period of 2016 and the first increase since 2010.

Year-to-date technology demand returns to growth after 6 years of decline

Source: Metals Focus; GFMS, Thomson Reuters; World Gold Council

Electronics

The volume of gold used in electronics grew 3% y-o-y to 67.3t in Q3. All main sub-sectors registered growth. Continued strength in the memory sector – where supply remained very tight and demand high – underpinned a 12 to 15% increase in demand for gold bonding wire in Q3. Samsung Electronics credited ‘strong demand for …memory chipsets…and flagship mobile devices’ as a key contributor to its record Q3 net profit. The prolonged shortage in memory chips is expected to persist into 2018 as factories struggle to increase output sufficiently to meet demand for high-end smartphones. We believe this bodes well for the short-term outlook for gold bonding wire. 

Demand for LEDs continued to improve thanks to sustained growth in automotive applications, such as collision avoidance and intelligent sensing systems. Demand for fine pitch LED displays gathered momentum, due to a surge in demand from smartphone applications: we estimate that monthly output volumes doubled in Q3 from the previous quarter and contributed to the y-o-y growth of gold usage in the LED sector of between 3 and 5%. 

Gold used in wireless applications also fared well: growing by around 8% y-o-y in Q3. Demand for 3D sensors – used in facial and gesture recognition – surpassed expectations. And, in our view, their wider applications in gaming, vehicles and healthcare industries will continue to generate growth.

The traditional Q3 seasonal peak in new smartphone launches boosted gold used in Printed Circuit Boards, which are an important component in wireless charging. 

Electronic demand by South Korea and Taiwan was 10% and 9% higher y-o-y respectively. Other countries/regions with impressive growth included China, Italy and Switzerland.

Researchers in the US and China have developed a gold-based catalyst that could improve the performance and efficiency of hydrogen-powered cars.1 Writing in the leading journal Science, researchers describe the development of a gold nanoparticle/molybdenum-carbide catalyst which attained a high level of activity at low temperatures, producing the pure streams of hydrogen critical to efficient fuel cell operation.

Footnotes:
  1. Siyu Yao et al, ‘Atomic-layered Au clusters on α-MoC as catalysts for the low-temperature water-gas shift reaction’, Science, Vol. 357, Issue 6349, July 2017.

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