Global gold demand up 15% in Q2 2016: Report

The Dollar Business Bureau

Global gold demand increased 15% during the 2016 second quarter on account of an escalated investment demand, said World Gold Council (WGC) in its latest report.

Overall gold demand stood at 1,050 tonnes during the second quarter of the current fiscal as against 910 tonnes during the corresponding quarter of last fiscal, according to the report.

Investment demand during the period amounted to 448 tonnes as global investors sought to diversify risks and store a value of money amid continued political, social and economic instability.

The performance of Exchange traded funds (ETFs) grew at 237 tonnes during the period. Bar and coin demand, too, was up across several international markets, including the USA, at 25 tonnes.

“The strength of this quarter’s demand means that the first half of 2016 has been the second highest for gold on record, weighing in at 2,335 tonnes.

“The global picture for gold is dominated by considerable and continued investment demand driven by the West as investors re-balance their investments in response to the ever-expanding pool of negative yielding government bonds and heightened political and economic uncertainty,” WGC Head of Market Intelligence Alistair Hewitt said.

While the demand for jewellery remained in positive in Iran (up 10%) and the US (up 1%), China and India, on the other hand, witnessed declines of 15% to 144 tonnes and 20% to 98 tonnes respectively.

According to the report, a slow demand in India was caused by mild rural income and the government’s move to raise the excise duty.

In China, the fall in gold demand was caused by a soft economic backdrop and, of course, the implementation of hallmarking legislation in May this year,

“The foundations for this demand are strong and diverse, drawing on a broad spectrum of investors accessing gold via a range of products, with gold-backed ETFs and bars and coins performing particularly strongly.”

“But the global gold market is, and has always been, based on balance: so whilst investment is currently the largest component of demand, we see a gradual return for the jewellery market in the second half of 2016,” Hewitt highlighted.