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  Add 15t net; noted Q3 outlook to follow on 30 October    Recently World Gold Council [WGC] published its’ report on, Central bank gold statistics! The report said, Central banks added a net 15t to global gold reserves in August, based on reported data from both the IMF and respective central banks. This is broadly in line with monthly net purchases between March and June, and signals a return to buying form after global reserves were unchanged in July (we revised down our initial July estimate of +10t after Bank Indonesia reported an 11t sale).    As we’ve noted previously, the recent gold price rally, which has reached multiple new all-time highs so far this year, likely remains a constraint on the level of buying by central banks. It may be a factor in more tactical selling too. But the recent slowdown in buying does not necessarily signal that central banks as a whole are losing interest in gold. In fact, recent developments, which we discuss below – show t...

  With emerging market demand softening, who drives gold next   Recently, World Gold Council [WGC] said, Stubborn stagflation about gold in their published, Gold Market Commentary. The report suggests further, the relationship between the price of gold and its core drivers shifts over time, sometimes reflecting who is most active in the market. For example, US real interest rates (opportunity cost) were tightly linked to movements in gold between 2007 and 2022.   Last month we suggested that one reason for gold’s decoupling from rates post 2022 was the preponderance of emerging market demand from central banks and other investors, rather than a breakdown in US investor relationship with rates.   Now that central banks and Asian investors have stepped back a bit, as indicated by our Gold Demand Trends data, local premia and intraday session returns, a tighter gold-rates relationship could re-establish itself and Western investors (particularly the US) could become mor...

  Western funds, divided almost between N. America and Europe    Global physically backed gold ETFs saw further inflows in July, adding US$3.2bn. July inflows came mainly from Western funds, divided almost equally between North America and Europe. Asia saw slight inflows while other regions experienced mild outflows. It is worth noting, global inflows are currently on pace for their second strongest year on record.    Boosted by continued inflows and a higher gold price, global gold ETFs’ total assets under management (AUM) rose further by 1% to US$386bn, another month-end high. Collective holdings increased by 23t to 3,639t, remaining the highest month-end total since August 2022.    North America attracted US$1.4bn in July, bringing y-t-d inflows to US$22bn, on pace for its second-strongest annual performance. While flows remained positive, they did slow m/m. We attribute this to a short-term rebound in the dollar and a rise in rates, as ...

This is the choicest part of the report, the drivers of Indian gold demand, published by the World Gold Council (WGC) This bodes well for gold demand as the economy is set to benefit from a demographic dividend: the IMF forecasts per capita GDP growth of 23% between 2022 and 2026 While India is the second largest consumer of gold, its per capita consumption is low. And demand faces challenges in the short term: from declining household savings rate and agricultural wages. Income may be the key long-term driver of demand, but it is affected by a variety of other factors, including policy measures.  Support from such measures is currently lacking as policy makers view gold demand solely through the prism of imports. Meanwhile, industry efforts to improve transparency are not cohesive. Building trust and improving awareness among consumers, together with innovation, can play a role in enhancing the image of India’s gold industry, boosting domestic demand and allowing it to play a pivo...

  Central banks gold buying offset by gross sales of 23.3t! At the Market Intelligence Group, World Gold Council (WGC) learned that by following net purchases in October, central banks returned to net selling in November. Global official reserves declined by 6.5t during the month. Like August and September, when central banks were also net sellers, this was the result of continued moderate buying being offset by a few sizeable sales. At a country-level, we can see that gross purchases amounted to 16t in November, broadly consistent with the levels of gold accumulation in August and September.  Uzbekistan added another 8.4t to their gold reserves, while Qatar (3.1t), India (2.8t), and Kazakhstan (1.7t) were the other countries to increase official gold reserves in November.   But this buying was more than offset by gross sales of 23.3t. In Turkey, higher local demand led to increased trading between domestic commercial banks and the central bank resulting in a 20.9t re...

Gold can enhance a portfolio in four key ways!   World Gold Council published the report, the relevance of gold as a strategic asset, UK edition! The report say that the Gold, a strategic asset for UK portfolios! “Our analysis illustrates that adding between 2.5% and 12.5% in gold to an average UK investor’s portfolio over the past decade would have resulted in higher risk-adjusted returns!”   Gold can enhance a portfolio in four key ways, 1: generate long-term returns, 2: act as a diversifier and mitigate losses in times of market stress, 3: provide liquidity with no credit risk & 4: improve overall portfolio performance. New decade, renewed challenges: As the new decade begins, investors face an expanding list of challenges around asset management and portfolio construction. Among these, 1: Low interest rates, which may push investors to seek riskier assets at elevated valuation levels and, for UK pension funds in particular, may increase the value of liabilities, po...

  A demand for gold loans through banks & NBFCs   In their Market Update for the November 2020 World Gold Council (WGC) published, Gold loans help India weather the Covid-19 storm. At the occasion Somasundaram PR, Managing Director, India, WGC said, “The gold loan industry has traditionally been a pillar of support for small businesses and households in need of emergency short term assistance.   In addition to unorganized lending that normally co-exists with any robust gold market, the regulated Institutional framework of “gold loans” in India has made it ubiquitous over the past decade which is indeed a boon.  In particular, Covid has boosted demand for gold loans through banks and non-banking financial companies (NBFCs).   The recent rise was seen some time since July 2019 when prices started moving up sharply. 28.8% rallies in domestic gold price this year and the need for quick credit among small businesses will further spur gold loans’ growth pos...

WGC releases retail gold insights: Russia investment   World Gold Council unveils Retail gold insights: Russia Investment. The report says, the gold investment market in Russia has ample headroom for growth. Investors feel strongly positive towards gold. They recognise its attributes and want a part of it. And as such, gold should be able to engage with this receptive audience.   On the one hand, the popularity of savings accounts is over-riding: regarded as safe and wealth protecting, they are by far the most popular investment choice. But alongside this we see the rise of crypto-currencies considered by some to be a high risk investment.   The punishing rate of VAT has doubtless held back the tide in gold investment, and the expected abolition of VAT is likely to revitalise the market. And any shift towards gold could be further enhanced by challenges in the domestic and global economy. Consumers are deeply concerned about how to protect their wealth in the face o...

WGC reports, Gold mid-year outlook 2020 Recently World Gold Council (WGC) released their Gold mid-year outlook 2020-Recovery paths and impact on performance. The report said Investors have embraced gold in 2020 as a key portfolio hedging strategy. Looking ahead, expectations for a faster recovery (V-shaped) from Covid-19 are shifting towards slower recovery (U-shaped), or potential setbacks from additional waves of infections (W-shaped). Regardless of the recovery type, the pandemic will likely have a lasting effect on asset allocation. It will also continue to reinforce the role of gold as a strategic asset. And we believe that the combination of high risk, low opportunity cost and positive price momentum looks set to support gold investment and offset weakness in consumption from an economic contraction. Gold outperformed in H1 as equities recovered: Gold had a remarkable performance in the first half of 2020, increasing by 16.8% in US-dollar terms and significantl...