Gold Nuggets: Will AI Be a Boon for Gold Demand?

Jewelry; investments in coins, small bars, exchange traded funds; and central bank purchases drive gold demand, but could the boom in Artificial Intelligence change all that?

Over the past five years, demand for gold has been dominated by jewelry, averaging 47%; investments in coins, small bars, and exchange traded funds (ETFs) at 28%; and net central bank purchases for official reserves at 17%. Industrial and Technological demand, a catch-all category for analysts, has averaged just 8%.¹

But clients often ask me if the boom in Artificial Intelligence (AI) will change all that? Could the seemingly unlimited applications of AI increase demand for gold in the Industrial and Technological sector?

Of course, history shows how demand for gold has evolved based on gold’s excellent conductivity, resistance to corrosion, and malleability. Because gold is so easy to work with, it’s been central to a wide variety of products over time. The Chinese have used gold in the treatment of smallpox and skin ulcers since 2,500 BCE, and gold’s use in ayurvedic medicine in India probably has a similar longevity. Today, gold compounds are used in injections to treat inflammatory conditions such as arthritis, as well as for implants, including stents in cardiac surgery. The advent of nanotechnology has also enabled the use of colloidal gold nanoparticles in the precise delivery of chemotherapy drugs.

So, will AI spark new industrial and technological uses?

Industrial and Technological Demand

Electronics currently represents the largest single source of demand in the Industrial and Technological category. And our growing dependence on digital devices from desktops and laptops to tablets and mobile phones ensures that demand will continue to increase.

The Industrial and Technological category also includes gold used in medicine and dentistry, aerospace, construction, cosmetics, and printing. Gold’s characteristic of being biologically inert renders it suitable for use in crowns, fillings, bridgework, and implants. In aerospace, gold is added to visors and windows to protect against the sun’s infrared rays. Gold’s addition to window glass helps insulate homes from both heat and cold. In cosmetics, gold is used in topical skincare creams, lip balms, and moisturizers by manufacturers from L’Oréal to Dior. In printing, gold is used primarily in surfacing CDs and DVDs as a protective covering, but its use in 3D printing is growing rapidly.

Additionally, gold-plating, once used for paintings in medieval times and domes of important civic buildings, is now used in wrist watches, eyewear, fountain pen nibs, and a host of other applications.

Gold is even occasionally offered in food, with gold shavings added to sushi, ice cream, or coffee.

Electronics’ Double-Digit Growth

In Gold Demand Trends Q2 2024, the World Gold Council notes that gold used in the electronics industry saw its third successive quarter of double-digit growth, rising 11%. The renewed demand for gold in the Technology sector was primarily due to high-end chips increasingly used for AI applications and high-performance computing.

In fact, most major chip manufacturers have reported strong demand and results. SK Hynix and Micron, two of the world’s largest memory chip manufacturers, have reported that their 2024 stock of high-end memory chips is already sold, with much of 2025’s production also reserved. Samsung is forecasting its Q2 revenue to rise by 23%, thanks to skyrocketing AI chip demand. More generally, the World Semiconductor Trade Statistics Group anticipates a robust 18 months; it is forecasting 16% growth across the semiconductor market in 2024.²

Big Picture, Bottom Line

I think it’s important to keep this electronics growth in perspective.

As the World Gold Council has pointed out, even if demand doubled in the Industrial and Technological sector that wouldn’t bring revolutionary change to the all-important balance between demand and supply. An 8% increase wouldn’t be enough to move the needle significantly in terms of the internal market dynamics of the gold market. Rather, as always, gold’s future price will be determined by the larger components of the demand side.

The good news for investors is that all three of those factors — jewelry, investments, and central bank purchases — look to have a bright future.