Gold has been sucking wind this summer, trudging along after getting slammed by a distant-future-rate-hikes scare. The resulting lower prices have really damaged psychology, leaving investors wavering on gold. Their recent capital inflows have reversed into modest selling, contributing to unusual weakness in this leading alternative asset. But investment demand should roar back in this inflationary environment.
Gold entered summer 2021 with strong upside momentum, in a young upleg that had just powered up 13.5% in 2.8 months by early June. This current interrupted upleg is the fifth of gold’s secular bull, and the previous four
averaged big 33.3% gains. Gold was progressing nicely until the June 16th meeting of the Fed’s Federal Open Market Committee. The FOMC was expected to do nothing, and that’s what it did.
The difference between physical gold investing and ETF investing was stark in the first quarter 2021 according to the
World Gold Council’s Gold Demand Trends data released last week.
Before focusing in on investment demand below a few notes on overall gold demand in the first quarter.
Total gold demand in the first quarter of 2021 was down 4%. However, because gold production and gold demand (jewellery, bar and coin etc.) are decentralized around the globe, and no one ever has a complete picture of all transactions. So the WGC adds up all the known supply and demand. If measured demand does not exactly match measured supply, then there is an X factor added to demand, because in the end demand should always equal supply. In the first quarter this balancing X factor increased by a whopping 247% over the first quarter 2020.
According to the World Gold Council’s latest Gold Demand Trends report, gold investment demand fell in Q1 due to being driven by hefty outflows in gold-backed exchange-traded funds (ETFs). This was attributed to growing expectations of higher interest rates impacted sentiment. While Q1’s overall .
Strengthening consumer demand mitigates impact of gold-backed ETF outflows
By: Times News Service
Photo used for illustrative purpose only
Muscat: Gold investment demand fell in Q1 driven by hefty outflows in gold-backed exchange-traded funds (ETFs) as growing expectations of higher interest rates impacted sentiment, according to the World Gold Council’s latest Gold Demand Trends report.
While Q1’s overall global gold demand, at 815.7 tonnes (t), was on par with the preceding quarter, there was a significant (23per cent)drop year-on-year, as gold-backed ETFs saw 177.9t of outflows.
However, the effect of this drop in ETF demand was mitigated by the strength of bar and coin demand. Such retail gold purchases reached 339.5t (+36 per cent year-on-year), influenced by price-driven ‘bargain-hunting and widespread concern over growing inflationary pressures.
India, China drive Q1 global gold demand for jewellery
April 29, 2021
Higher ETF outflows drag down overall offtake of yellow metal by 23 per cent India and China drove gold jewellery demand 52 per higher during the first quarter this year compared with the same period a year ago, but it was still lower than the average first quarter demand during 2015-2019, according to the World Gold Council (WGC).
In its
Gold Demand Trends 2021 report, the WGC said that jewellery offtake totalled 477.4 tonnes compared with 248.25 tonnes a year ago.
The WGC said overall first quarter demand for gold, excluding over-the-counter, was 23 per cent lower than the first quarter last year at 815.7 tonnes.