Industrial demand for gold breaks down into three components, each with its own price-sensitivity.  Dental demand for gold has been declining for some time as cheaper – although not better – substitutes have been found and gold fillings are no longer subsidised by some government sponsored health systems as they were in the past. 

However, industrial demand for gold has been dominated by the electronics sector for some years and the driver of this source of demand is effectively the demand for electronics as a sector.  Because gold is one of many inputs in electronic components, and because there are few, if any, substitutes (depending on the application), this component of demand tends to be fairly price-insensitive in the short to medium term.  Over time, manufacturers may increasingly focus on thrifting, a term that is used to describe the process whereby less gold is used in order to achieve the same end result. 

Industrial applications are a potential source of a small positive shift in demand, should new uses of gold prove commercially attractive.  There are no substitutes for many existing applications for gold, making these uses reasonably unresponsive to price. 

Overall, the key driver of industrial demand is the economic cycle and its impact on the electronics industry.