Facts ‘n’ figures: First-half gold demand jumps on central bank, ETF buying

The following is an edited summary from the World Gold Council, based on its “Gold Demand Trends Q2 2019” report. To access the report, visit www.gold.org.

Global gold demand grew to 1,123 tonnes in this year’s second quarter — an 8% rise on the same period last year, according to the World Gold Council’s latest Gold Demand Trends report. Continued central bank buying and sustained growth in gold-backed, exchange-traded funds (ETFs) drove this increase. Taken together with the first quarter of the year, gold demand increased to 2,181.7 tonnes in the first six months of 2019, up 8%, compared with the first half of last year.

Central banks bought 224.4 tonnes of gold in second-quarter 2019. This took first-half buying to 374.1 tonnes — the largest net first-half increase in global gold reserves in our data series. In a continuation of recent trends, buying was spread across a range of largely emerging-market countries.

Holdings of gold-backed ETFs grew 67.2 tonnes in the second quarter to a six-year high of 2,548 tonnes. Continued geopolitical instability, dovish commentary on monetary policy from central banks, and the rallying gold price in June were the main factors driving inflows into the sector.

A strong recovery in India’s jewellery market pushed demand in the second quarter up 12% to 168.8 tonnes. A busy wedding season and healthy festival sales boosted demand, before the June price rise brought it to a virtual standstill. India’s growth drove modest improvement in the global jewellery total, up 2% year-over-year, to 531.7 tonnes.

Bar and coin investment in the second quarter sank 12% to 218.6 tonnes. Combined with the soft first-quarter number, this took the first-half total to a six-year low of 476.9 tonnes. A 29% year-over-year drop in China accounted for much of the global second-quarter decline.

Gold supply grew 6% in the second quarter to 1,186.7 tonnes. A record 882.6 tonnes for second-quarter gold mine production and a 9% jump in recycling to 314.6 tonnes — helped by the sharp June gold price rally — led the growth in supply. Over the first half, supply reached 2,323.9 tonnes — the highest level since 2016.

Gold prices reached multi-year highs. The gold price rallied in June, breaking through US$1,400 per oz. for the first time since 2013. The price rise in other currencies was even more pronounced. Among the factors driving this rally were expectations of lower interest rates and political uncertainty, with further support coming from strong central bank buying.

Gold in the second quarter: key findings

• 
Overall demand was 1,123 tonnes in the second quarter, an 8% increase, compared with 1,038.8 tonnes in second-quarter 2018;
• Consumer demand was down at 750.3 tonnes, compared with 769 tonnes in the same period last year;
• 
Investment demand was relatively flat, with 1% growth to 285.8 tonnes, compared with 282 tonnes in second-quarter 2018;
• 
Global jewellery demand increased 2% to 531.7 tonnes in the second quarter, up from 520.8 tonnes in the same period in 2018;
• Central bank demand increased 47% to 224.4 tonnes, compared with 152.8 tonnes in second-quarter 2018;
• Demand in the technology sector decreased 3% to 81.1 tonnes, compared with 83.3 tonnes in second-quarter 2018;
• 
Total supply was up at 1,186.7 tonnes, from 1,121.3 tonnes in the same period last year; and
• Recycling was up 9% at 314.6 tonnes, compared with 289.8 tonnes in second-quarter 2018.