Gold has always been a go-to for investors looking to protect themselves against inflation and economic instability. However, something new is reshaping its demand. The rapid growth of the artificial intelligence (AI) sector is creating a substantial need for gold.
With the expansion of AI, there’s a surge in investment for sophisticated semiconductors, servers, and massive data centers that enable these technologies. These developments also depend on a variety of materials essential for high-tech electronics, particularly gold.
This demand for gold is growing, especially as its price has reached historical highs. It’s interesting—despite these costs, tech companies seem reluctant to switch to more affordable alternatives. This suggests that gold’s appeal could rise further with the AI industry’s expansion.
Gold is valuable in electronics due to its excellent conductivity, durability, and resistance to corrosion. As of October 5, it’s trading at approximately $4,153 per ounce, marking a nearly 6% increase, or about $225, compared to the previous year.
Joseph Cavatoni, an expert on the gold market from the World Gold Council, points out that companies typically look for cheaper substitutes after developing gold-dependent technology. Yet, that doesn’t seem to be happening now.
“They might start a technology with gold and later think, ‘Let’s find a cheaper alternative, like tungsten,’” he noted. “However, we’re seeing that this isn’t happening.”
The surge in technology demand is already apparent. In the second quarter, gold demand from the tech sector rose by 2% year-over-year to 80.4 metric tons, driven by the infrastructure for AI, high-performance semiconductors, and advanced components. Electronics demand increased by 4% to 68.3 tons.
Cavatoni mentioned that gold has certain advantages over its substitutes in areas such as chip manufacturing and thermal conduction. The AI field might also have a reduced sensitivity to higher gold prices since the quantities needed are relatively small.
“This is a rapidly growing area that doesn’t seem to be overly affected by price,” said Cavatoni. “I think it’s likely to continue expanding as AI grows.”
However, it’s worth noting that the tech sector is still just a minor part of the overall gold market compared to investments, central bank purchases, and jewelry. So Cavatoni mentions that it’s “less likely to drive gold prices” significantly.
For the moment, he sees technology as an increasingly vital factor in gold demand, one that “doesn’t look like it will slow down anytime soon.”
