Last week’s flight-to-safety momentum for gold amid world chaos...

Last week’s flight-to-safety momentum for gold amid world chaos may have slowed just a tad, but prices are still moving in the right direction for the precious metal as we round out the week.

At the time of writing, spot gold is changing hands for roughly US$1,990 (good year, that – especially for the Canberra Raiders) and about $3,143 of our Aussie dollars. This is higher than this time last week and still very close to the all-time high for bullion Down Under, which is about $3,163, posted yesterday.

We made a big deal about the Aussie gold ATH last week amid raging global conflicts and still-uncertain macroeconomic times.

It was, and still is, a big deal, but we have a feeling we haven’t seen the last of fresh weekly highs on spot gold in the short term. We’ll see how that statement holds up this time next week.

“Technically, December gold futures bulls have the overall near-term technical advantage,” wrote *****’s analytical gold charts watcher Jim Wyckoff, adding:

“Prices are in an uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the October high of US$2,009.20.”

Zooming out a tad, though, here’s how gold’s travelled over the past few years. You probably don’t need a reminder of how and why the stock markets crashed in early 2020, and how gold performed correspondingly. It’s a cruel mistress that rides high on crisis, but gotta respect the consistency, and the hedge.

Aussie gold price over the past few years. Source: abcbullion.com.au

AI will drive demand for gold: Metals Focus report

Wars, pandemic, inflation, chaos in general and the strength/weakness of the US dollar – yep these things are all factors in the flight to the safety (and steady increase over time) of gold.

And obviously factors of supply and demand greatly affect the precious metal’s price, too. Supply, that is, from mining companies. And demand, certainly lately, significantly coming from global central bank hoarders and other investors.

But what else can drive the demand for the precious commodity? The jewellery trade and industrial usage.

Interestingly, according to a new report from independent global precious metals research group Metals Focus, the tech boom surrounding artificial intelligence (AI) “should” help support industrial demand for gold and other precious metals in 2024.

Meanwhile the World Gold Council’s website notes that jewellery still represents the largest source of annual demand for gold per sector – near 50% of total gold demand, with China and India by far the biggest markets (albeit waning somewhat this year). Rappers such as Kanye and Jay Z make a fair crack as a competing market, too. Joking, sort of…

And industry/tech only represents about 7% of global gold demand at the moment according to Statista research, with investments and central banks making up the rest.

But the tech demand looks like it’s set to increase in coming years with the increase of generative AI and conversational AI applications, such as Chat GPT, for instance. How so?

AI boom takes precious metals along for the ride

“Expected upside from several applications that are gradually maturing should help support the recovery in industrial offtake [of precious metals] next year,”Metals Focus notes.

The thesis there is that a boom in demand for AI applications creates a boom in demand for the chips and components that help power the tech – a boon for manufacturers such as Nvidia, but also for precious metals producers.

“At present, among the various emerging applications there is little that is capturing more spotlight than artificial intelligence (AI)… Generative AI is expected to make inroads in a growing number of fields, particularly in 2024, wrote the precious metals consultancy.

Since most components used in conjunction with AI devices are high-specification, “we expect to see widespread support for a range of precious metals bearing components”.

Also:

“To cope with the evolution of AI algorithms, shipping growth for AI servers and switches will rise by double digits over the next few years and stimulate precious metals demand.

“Demand will rise for platinum alloys used in chip manufacturing, silver-palladium Ag-Pd multi-layer ceramic capacitors (MLCCs) in high power components, gold bonding wire in chip and memory packages, gold plating in printed circuit boards and palladium plating on lead frames.”

And here’s an example of the incredible power of AI technology…

Next stop, AI is definitely plotting in the background, secretly planning to take over our jobs at * when we’re down the pub on a Friday and not looking…