Gold electronics demand increased 4% year-over-year to 69.3 tonnes in Q1 2026, driven primarily by artificial intelligence infrastructure spending, according to the World Gold Council. This growth came as AI data centers, server mainboards, integrated circuit substrates, and printed circuit boards for low-earth orbit satellites saw increased demand. Memory and semiconductor usage also rose, driven by the same AI memory demand surge reshaping chipmaker valuations. The electronics sector, which accounts for the majority of gold used in technology, climbed from 65.8 tonnes in the same quarter of 2025. As per the World Gold Council, gold usage in the electronics space very much remained on a two-speed setting: strong AI infrastructure investment offset weakness in smartphone and laptop shipments, primarily due to surging memory costs. The latest data shows this represents the highest level since late 2021, marking a significant milestone in gold's industrial transformation.
Tokenized gold markets recorded approximately $90.7 billion in trading volume during Q1 2026, representing 30% growth and the highest level since the product's inception. Over 44,500 new wallets were created in the tokenized gold space during the same period, demonstrating rapid adoption among both traditional and crypto-native investors. Products like Paxos Gold (PAXG) and Tether Gold (XAUT) allow investors to gain exposure to physical gold without dealing with storage, insurance, or logistics. Each token is typically backed by one troy ounce of allocated gold held in vaults, with Tether having accumulated 116 tons of gold by November 2025, equating to roughly 2% of global quarterly demand in certain periods. For crypto-native investors, tokenized gold products offer a way to stay on-chain while diversifying into an asset class with a 5,000-year track record, with PAXG holders able to use their tokens as collateral in DeFi protocols.
Samsung Electronics expects strong AI chip demand to exacerbate supply shortages through 2028, despite investor concerns, as its semiconductor profit surged over 250-fold in the second quarter. The world's top memory chipmaker posted this massive profit surge as it races to catch up with SK Hynix in supplying high bandwidth memory (HBM) chips used in AI processors. Samsung shares surged 8% and SK Hynix shares rebounded 3% in early trading after the earnings call. "The supply shortage in 2027 is expected to worsen compared to this year, and it is expected to continue in 2028," Jaejune Kim, executive vice president of Samsung's memory business, told analysts. Kim explained that demand that could not be met this year was being pushed into next year because of tight supply, which could add to future supply constraints.
In contrast to AI-driven growth, the consumer electronics market experienced significant contraction. Smartphone shipments are projected to fall 13.9% in 2026 to 1.09 billion units, according to IDC forecasts, which would represent the steepest annual drop the market has recorded. High gold prices continued to accelerate thrifting and substitution in many low- and midrange applications, adding further pressure to traditional consumer electronic applications. The consumer end moved in the opposite direction of AI infrastructure investment, with high gold prices also continuing to accelerate thrifting and substitution in many low- and midrange applications.
The World Gold Council identified key downside risks, noting that weaker AI returns or an electronics downturn could remove the support now carrying gold through the handset slump. The report emphasized that technology demand could fade if AI returns disappoint, posing downside risk to adoption and price. The implications are indirect for crypto, DeFi and hardware security and supply chains. The council flagged a key downside risk that weaker AI returns or an electronics downturn could remove the support now carrying gold through the handset slump, highlighting the dual nature of current market dynamics where AI growth offsets traditional consumer device weakness. However, the concentration risk in tokenized gold markets remains a concern, as the sector's growth depends heavily on continuous onboarding from traditional finance audiences who may not yet be comfortable with self-custody or DeFi mechanics.
