Gold demand up 15% in Q2: WGC

The World Gold Council has released its Gold Demand Trends 2016 for the second quarter of the year. It noted a surge in investments while jewellery had a shy performance.

The total gold demand increased to 1,050t from 910t rising 15 percent on y-o-y basis. The investment demand rose a whooping 141 percent to 448t from 186t in the same period last year. Also, exchange traded funds (ETFs) saw demand of 237t. Bar and coin demand increased in many markets – in the US it was at 25t rising 101 percent.
Demand was healthy in the western markets but took a weak turn in Asian markets owing to the rising prices and other factors within the regions.

The jewellery demand took a fall of 14 percent to 444t from 514t in the same period last year.

WGC noted that gold prices rose 25 percent in the first six months of 2016 which pushed gold’s investment demand. The total gold demand in the first half of the year touched 2,335t – the second highest first half on record. The investment demand in the first half of the year rose 16 percent to 1,063.9t, higher than the previous H1 high from 2009. Investment was the largest component of gold demand for two consecutive quarters (Q1 and Q2) – the first time this has ever happened.

IN the second quarter of 2016, central bank demand dropped 40 percent to 77t from 127t in Q2 2015 with net purchases for H1 now totalling 185t. Total supply in the quarter rose 10 percent on y-o-y basis to 1,144.6t. Consumer demand in India dropped 18 percent to 131t in the quarter, while China saw a 14 percent drop to 183.7 percent.

Gold recycling rose 23 percent to 327.7t, following the consumer preferring to recycle amidst rising gold price. WGC notes that while investment from the western markets is dominating the gold demand, there is a slow revival of gold jewellery demand in the second half of this year.