The Rising Technological Demand for Gold in the Age of AI and Advanced Electronics
The Evolving Demand for Gold in the Modern Economy
Gold has long been a precious metal of significant allure, from its traditional roles in jewelry and as an investment, to its increasing incorporation into high-tech applications. Over the past five years, distinct segments have driven gold demand, with jewelry accounting for 47%, investment channels such as coins, small bars, and exchange-traded funds (ETFs) making up 28%, and net central bank purchases contributing 17% to official reserves. Notably, the lesser-known Industrial and Technological sector has averaged around 8% of total demand, a figure poised for growth amid the rise of artificial intelligence (AI) and advanced electronics.
The Technological Intersection of AI and Gold
The integration of gold into AI-powered devices represents a transformative shift in the Industrial and Technological sector. Key components such as processors, memory chips, and sensors rely heavily on gold due to its superior physical properties. This increased demand is evidenced by consecutive quarters of double-digit growth in gold usage within the electronics industry, marking an 11% increase in Q2 2024. The primary driver for this surge is the proliferation of sophisticated AI applications and high-performance computing systems that utilize high-end gold-laden chips.
Gold's unique characteristics—namely its exceptional conductivity, resistance to corrosion, and remarkable malleability—make it an indispensable element in the production of advanced electronic components. These properties ensure optimal performance and durability in cutting-edge technological applications, solidifying gold's status as a critical resource in the AI era.
Expanding Semiconductor Market and Diverse Applications
Major semiconductor manufacturers like SK Hynix and Micron have reported robust demand for high-end memory chips, marking the unprecedented reservation of their production for 2024 and a significant portion of 2025. Similarly, Samsung predicts a 23% revenue increase in Q2, driven predominantly by AI chip demand. The World Semiconductor Trade Statistics Group forecasts a vigorous 16% growth in the wider semiconductor market throughout 2024, underscoring the impetus provided by AI-driven advances.
Beyond electronics, gold's application range extends to fields such as medicine, dentistry, aerospace, cosmetics, and even 3D printing. Its critical role in these industries emphasizes gold's versatility and indispensability in modern technological and industrial advancements.
Gold Market Dynamics and Future Outlook
Despite the significant rise in demand within the Industrial and Technological sector, it is unlikely to vastly alter the equilibrium between gold's supply and demand. The substantial contributions of jewelry, investment, and central bank purchases maintain their dominance, exerting more influence over the gold market. Nevertheless, the increasing technological application of gold cannot be discounted, as it brings essential diversification to its use.
The World Gold Council acknowledges the supportive role of AI in boosting gold's technological demand, yet maintains a prudent outlook. With a commendable 7% year-over-year growth in demand within technology from a modest base, gold continues to carve a niche in the rapidly evolving landscape of modern technology, while traditional demand segments sustain its enduring legacy. As AI and related technologies burgeon, the potential for gold's industrial application may further impact its economic significance.