Q2 2017 World Gold Demand Trends

Gold

No comments. Just a very topical read. We at FintekNews are really on board with gold.  Short & sweet commentary on this one.
(Bill Taylor/CEO)

“August 8

On Thursday August 3rd, the World Gold Council released its quarterly demand trends report for the April-June period.

Overall, gold demand was recorded at 953.4 tonnes, which was 10% less than Q2 2016; demand for the first half of the year, meanwhile, fell by 14% to 2003.8 tonnes from the last year’s 6-month period. A slowdown in ETF inflows has been held largely responsible, with demand unable to match the record levels of 2016.

Investment

Investment demand plunged between Q2 2016 and Q2 2017, by 34% to 296.9 tonnes. While investors continued to buy gold-backed ETFs during the quarter – global AUM grew by 56 tonnes – this paled in comparison to the 237.4 tonnes purchased a year earlier. H1 holdings, meanwhile, rose by 167.9 tonnes.

Investment in gold ETFs during the quarter was influenced by several factors:

  • Monetary policy – with the Federal Reserve raising interest rates and the ECB signalling possible monetary tightening soon, expectations of higher rates dampened ETF demand.
  • The 8% increase in the gold price rose during the first half of 2017, led to some investors becoming more cautious and thus prevented them from building positions. Others even sold their positions to take profits.
  • Event risk – geopolitical tension drove a fair amount of ETF demand, with deteriorating US-North Korea relations and the continuing surprises being thrown up the Trump presidency both causing investor concern.

European demand has dominated the global ETF space during H1, with ETFs listed in the region growing by 128t during the six months and absorbing 76% of net global inflows.

Bar and coin demand gained 13% on the previous year’s first quarter, while H1 demand was up by a solid 11%. However, the figures are helped by an exceptionally weak H1 2016 – in fact, Q2 demand of 240.8t remains well below both the 5-year and 3-year quarterly averages of 306.1t and 263t respectively.

Shanghai Gold Exchange purchases accounted for a significant proportion of Q2 bar and coin demand, with investors – especially high net worth individuals – benefitting from the SGE’s lower prices compared to commercial banks…”

Full Story at rmg.royalmint.com