Exchange-Traded Products were the only area of growth
November 10, 2016: Gold demand fell 10% in Q3 to 992.8 tonnes (t). Exchange-Traded Products were the only area of growth, with inflows of 145.6 tonnes. Bars, coins and jewellery remained very weak: year-to-date consumer demand was down 16%, according to the World Gold Council’s latest Gold Demand Trends report.
Total investment demand rose 44% to 336 tonnes, with ETP inflows accounting for 146 tonnes, as investors continued to build up their strategic allocations to gold. The third successive quarter of inflows into ETPs – which were dominated by European funds – were predominantly driven by on-going economic and geopolitical uncertainty, ahead of the US election and also in Europe post the Brexit referendum decision.
The key findings included in the Gold Demand Trends Q3 2016 report are as follows:
- Overall demand for Q3 2016 was 993t, a fall of 10% compared to 1,105t in the same period last year
- Total consumer demand for Q3 2016 fell 26% to 683t from 917t in the same quarter last year
- Total investment demand grew 44% to 336t this quarter compared to 232t last year
- Global jewellery demand was down 21% at 493t, compared with 622t in the same period last year
- Central bank demand reached 82t this quarter, compared with 168t in the same period last year
- Demand in the technology sector was virtually flat year-on-year, down just 1% to 82t
- Total supply grew by 4% to 1,173t this quarter from 1,127t in the third quarter of last year. This was largely driven by recycling, which increased 30% to 341t, from 262t in the same period last year.
China and India, the two biggest consumers of gold saw a drop in demand in the third quarter. Both markets suffered high gold prices and limited incomes. China’s demand dipped due to economic and India’s demand dipped due to change in government policies.
Significantly, in November, the Indian government demonetised select currency (Rs 500 & Rs 1000 denomination) to ensure transparency and accountability, which sent demand for gold sky high. India being one of the biggest consumers of gold, the impact is likely to be felt in the Q4 report.