LAUNCESTON, (Australia): Gold has been the standout commodity performer so far this year, gaining 18.5% and posting a record high. But the precious metal may become a victim of its own success, with consumer buying at risk from the surge in prices.

Spot gold ended at $2,443.29 an ounce on Aug. 2, and it has largely held onto the gains made this year, which saw a sustained rally to an all-time high of $2,483.60 on July 17. The World Gold Council released its quarterly report last week and the industry group reported total demand of 1,258.2 metric tons in the second quarter, the highest on record for a second quarter and some 4% above the same period in 2023.

But the breakdown of the demand figures shows some trends that may point to a slowdown in coming quarters. The biggest gain in demand was from what the Council called the Over The Counter (OTC) market, which largely means buying from institutional investors, high net-worth individuals and family offices. OTC demand was 329.2 tons in the second quarter, up 53% from the same quarter in 2023 and a massive jump of 385% from the first quarter.

The Council attributed the surge in OTC appetite to “portfolio diversification,” which leads to the question as to how sustainable this demand is, given that once these investors have reached the point where they feel they have sufficient gold in their asset mix, they will likely ease back on purchases.