Comments
Global demand for gold fell 6 per cent in the first half of this year mainly due to a sharp decline in purchases by exchange traded funds (ETFs), the World Gold Council said in a report on Thursday.
Total global demand for gold was 1,959.9 tonnes over January-June, down from 2,086.5 tonnes in the same period last year and the lowest first-half total since 2009, the industry-funded WGC said in its latest Gold Demand Trends report.
For the second quarter, demand was down 4 per cent year-on-year at 964.3 tonnes. Purchases of gold for investment fell 9 per cent, driven by a 46 per cent decline in ETF buying. Central bank purchases dipped 7 per cent over April-June and a weak Indian market dragged use for jewellery, the biggest source of demand, down 2 per cent.
“It's been a soft start to the year and that's largely because of lower investment demand,” said Alistair Hewitt, WGC's head of market intelligence.
ETF investment
ETF investment was weakest in the United States, where a strong economy gave little incentive to buy gold, traditionally used as a safe place to store assets during political and economic uncertainty. But in Europe, demand was bolstered by the rise of eurosceptic parties in Italian elections and uncertainty over European Central Bank policy, Hewitt said.
In China an escalating trade dispute with Washington and falling stock markets drove investment demand. “Towards the end of the second quarter we actually saw outflows from US listed funds,” Hewitt said.
“It was really the European inflows that meant we saw modest global inflows over the quarter.” In Iran, meanwhile, sales of gold bars and coin surged 202 per cent as the United States pulled out of a deal on the country's nuclear programme.
Jewellery demand failed to gain from a 5.4 percent fall in the prices of gold over April-June because the currencies of key consumers, including China, India and Turkey weakened, making dollar-priced gold more expensive for local buyers, the WGC said.
Jewellery consumption in India fell 8 per cent in the second quarter to 147.9 tonnes, in part because of the weaker rupee. Demand in China was more resilient, rising 5 per cent to 144.9 tonnes. On the other side of the market, increased mine production and recycling helped lift overall supply by 3 per cent to 1,120.2 tonnes in the second quarter.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.