WGC reports on gold demand trends for second quarter
August 04, 19
The World Gold Council reported that central bank buying and healthy ETF inflows were the driving forces behind gold demand throughout the first half of 2019. Growth during the first half in jewelry demand was largely the product of a more positive environment for Indian consumers. Shifts in bar and coin investment were very much price-related: as the gold price powered its way to multi-year highs, profit-taking kicked in and retail investment all but dried up. The technology sector reduced its usage of gold due to challenging global conditions, although the outlook is for this element of demand to establish something of a floor over coming quarters. Solid growth in both mine production and recycling fed into a 2 percent increase in total first half gold supply.
Highlights for the first half were:
· Central banks bought 224.4 tons of gold in second quarter of 2019- 374.1 tons in first half.
· Holdings of gold-backed ETFs grew 67.2 tons in the second quarter t to a six-year high of 2,548 tons. The main factors driving inflows into the sector were continued geopolitical instability, expectation of lower interest rates, and the rallying gold price in June.
· A strong recovery in India's jewellery market pushed demand in the second quarter up 12 percent to 168.8 tons. A busy wedding season and healthy festival sales boosted demand, before the June price rise brought it to a virtual standstill. Indian demand drove global jewelry demand two percent high compared to 2018, to 531.7 tons.
· Bar and coin investment in the second quarter sank 12 percent to 218.6 tons.
· Gold supply grew 6 percent in the second quarter to 1,186.7 tons. A record 882.6 tons for the second quarter gold mine production and a 9 percent jump in recycling to 314.6 tons.
· Gold prices shot to multi-year highs. The gold price broke through US$1,400/oz for the first time since 2013. Among the factors driving this rally were expectations of lower interest rates and political uncertainty, with further support coming from strong central bank buying.