Global demand for gold, that darling of the investor world, slumped 17% last quarter.
Yes, despite all the hype around the glittery, golden metal, the total tonnage purchased around the world slid to 919.8 metric tons, from 1,107.0 tons for the same period a year earlier.
And—maybe surprisingly—it’s not all down to the sky high prices.
There was one key factor that drove down the tonnage of gold bought when compared with the same months of last year – ETPs, or exchange-traded products.
Demand for ETPs was down a massive 82% when compared with second quarter 2010 levels. Part of this was down to heavy liquidation across these sorts of financial products earlier in the year as investors cashed in on the metal’s record-breaking run—with gold having rallied more than 10% on the start of the year to several all-time bests by the start of May.
But largely it was an inability for these funds to match the kind of levels of investment recorded in the second quarter of 2010, when the second highest quarterly inflows on record were posted.
ETP demand was a huge 291.6 tons in that quarter of last year as fears over the growing euro zone debt crisis sparked a flurry of fresh investment in the yellow metal, pushing it to what were fresh record highs at the time.
Last quarter demand was just 51.7 tons. While much, much lower, this was still very sizeable, though, when compared with the 22.3 tons of purchases in 4Q 2010 and the 62.1 tons of sales in 1Q of this year.
“Ultimately the fall [in total global demand] was a function of ETP tonnages, which were quite volatile last quarter,” said WGC managing director of investment Marcus Grubb.
Outside of ETPs, other sectors of demand are looking very healthy indeed says the World Gold Council—despite the near-record high prices.
“Overall, the quarter wasn’t a bad one,” Mr. Grubb said.
Second-quarter jewelry demand was up 6%, technology demand rose 2%, and bar and coin demand increased by 9%.
Central bank gold buying quadrupled as officials in emerging markets scrambled to diversify their reserve holdings.
All quite reasonable figures given the metal’s price broke $1,500 an ounce in the quarter, just a year after trading closer to $1,100 an ounce.
As long as those sectors hold up, there could be some quite strong figures posted in the second half of the year, with “the trajectory of ETF demand” so far this quarter looking very promising, Mr. Grubb says.
In the world’s largest gold-backed fund, SPDR Gold Trust, holdings are now at 1,272 tons, up from just 1,208 tons at the end of June.
“So far in 3Q we have seen the second great European credit crisis, and the U.S. credit downgrade, so we will expect to see some strong demand when the next figures come out,” he says.
Yes, despite all the hype around the glittery, golden metal, the total tonnage purchased around the world slid to 919.8 metric tons, from 1,107.0 tons for the same period a year earlier.
And—maybe surprisingly—it’s not all down to the sky high prices.
There was one key factor that drove down the tonnage of gold bought when compared with the same months of last year – ETPs, or exchange-traded products.
Demand for ETPs was down a massive 82% when compared with second quarter 2010 levels. Part of this was down to heavy liquidation across these sorts of financial products earlier in the year as investors cashed in on the metal’s record-breaking run—with gold having rallied more than 10% on the start of the year to several all-time bests by the start of May.
But largely it was an inability for these funds to match the kind of levels of investment recorded in the second quarter of 2010, when the second highest quarterly inflows on record were posted.
ETP demand was a huge 291.6 tons in that quarter of last year as fears over the growing euro zone debt crisis sparked a flurry of fresh investment in the yellow metal, pushing it to what were fresh record highs at the time.
Last quarter demand was just 51.7 tons. While much, much lower, this was still very sizeable, though, when compared with the 22.3 tons of purchases in 4Q 2010 and the 62.1 tons of sales in 1Q of this year.
“Ultimately the fall [in total global demand] was a function of ETP tonnages, which were quite volatile last quarter,” said WGC managing director of investment Marcus Grubb.
Outside of ETPs, other sectors of demand are looking very healthy indeed says the World Gold Council—despite the near-record high prices.
“Overall, the quarter wasn’t a bad one,” Mr. Grubb said.
Second-quarter jewelry demand was up 6%, technology demand rose 2%, and bar and coin demand increased by 9%.
Central bank gold buying quadrupled as officials in emerging markets scrambled to diversify their reserve holdings.
All quite reasonable figures given the metal’s price broke $1,500 an ounce in the quarter, just a year after trading closer to $1,100 an ounce.
As long as those sectors hold up, there could be some quite strong figures posted in the second half of the year, with “the trajectory of ETF demand” so far this quarter looking very promising, Mr. Grubb says.
In the world’s largest gold-backed fund, SPDR Gold Trust, holdings are now at 1,272 tons, up from just 1,208 tons at the end of June.
“So far in 3Q we have seen the second great European credit crisis, and the U.S. credit downgrade, so we will expect to see some strong demand when the next figures come out,” he says.
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