Gold demand up by 1% in Q3 YoY
Global
jewellery demand increased by 6% YoY
Global
gold demand was steady in Q3 2018 at 964 tonnes (t), up just 6t year-on-year
according to the World Gold Council’s latest Gold Demand Trends report. Robust
central bank buying and a 13% rise in consumer demand offset large outflows in
gold-backed exchange-traded funds (ETFs). Lower gold prices saw retail
investors take refuge in bars and coins, while jewellery purchases increased in
India, China and across South-East Asia.
Bar
and coin investors took advantage of the price dip, with demand up 28% y-o-y.
Stock market volatility and currency weakness boosted demand in many emerging
markets. China, the world’s largest bar and coin market, saw demand rise 25% to
86t y-o-y. Iranian demand hit a five-and-a-half year high at 21t.
Jewellery
demand in Q3 2018 saw price-led y-o-y growth of 6%. Lower gold prices during
July and August encouraged bargain hunting among price-sensitive consumers.
Growth in India and China, up 10% in each region, outweighed weakness in the
Middle East, which was down 12%.
Central
bank gold reserves grew 148t in Q3 2018, up 22% y-o-y. This is the highest
level of net purchases since 2015, both quarterly and year-to-date. The quarter
was particularly notable due to a greater number of buyers.
Demand
for gold in technological applications rose in Q3 by 1% y-o-y, to 85t. This
marks the eighth consecutive quarter of growth, primarily driven by gold’s use
in electronics such as smartphones, servers and the automotive industry.
ETF
outflows reached 103t in Q3 2018, the first quarter of outflows since Q4 2016.
North America accounted for 73% of the outflows, fuelled by risk-on sentiment, a
strong dollar and price-driven momentum.
Alistair
Hewitt, Head of Market Intelligence at the World Gold Council, commented:
“The
physical market responded quickly when the gold price breached US$1,200/oz in
August, with retail investors around the world diving into the market. And
there are welcome developments in the central bank space. They’re buying a lot
and we are seeing new central banks enter the market as they look to hedge
their dollar exposure.
“The
equity sell-off last week is a timely reminder of the threats stalking markets:
valuations are stretched, debt levels are high, and rising rates and
quantitative tightening pose risks that an allocation to gold can help
hedge.”
The
total supply of gold decreased slightly in Q3 2018, down 2%, as de-hedging
continued for a second consecutive quarter, and lower gold prices and economic
improvement in the US and Europe discouraged recycling. In contrast, mine
production in Q3 registered its sixth consecutive quarter of growth, up 2% to
875t and is the highest level of quarterly production in our records. A
combination of growth from key producing countries, such as Russia and Canada,
as well as the improving production pipeline will be supportive factors for
further growth in 2018.
The
key findings included in the Gold Demand Trends Q3 2018 report are as follows:
1: Overall demand was 964t, an increase
of 1% compared with 958t in Q32017
2: Total consumer demand rose by 13% to
834t, from 739t in the same period last year
3:
Total investment demand was
down 21% to 195t compared with 246t in Q32017
4: Global jewellery demand increased
by6% to 536t, from 506t in the same period in2017
5: Central bank demand was up by 22% to
148t compared with 122t in Q32017
6: Demand in the technology sector
increased 1% to 85t compared with 84t in Q32017
7: Total supply fell by 2% to 1,162t,
from 1,186t in the same period last year
8: Recycling decreased by 4% to 306t,
compared with 318t in Q32017
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