The shine is dulling further for gold.
The second quarter data from the World Gold Council paints a picture of a commodity marking time.
World demand for the yellow metal for jewellery is languishing at the 500t/quarter level. In fact it has only been over that level once since Q4 2015. Fifteen years ago, it was almost double that.
Retail investor demand for in coin and bars remains very subdued.
Gains for professional investor holdings for Exchange Traded Funds were barely positive.
And demand for industrial use (including dentistry) remains almost irrelevant.
Here are the long run global gold demand charts (in tonnes) with the Q2 2017 data added:
On the supply side, things were not much better.
Mine and scrap supply into this market was stable at over 1,000t/qtr. At that level, it exceeds the private investor demand by more than 100t in the latest quarter and more than 300t over the past year.
The only chance this market has is if central banks raise their demand, and while they did in Q2-2017, they did not soak up all the supply. If it wasn't for the buying by the central banks of Russia and Turkey, things would be grim on this front.
Still, gold prices in US dollars moved from US$1,159/oz at the end of 2016, to US$1,257 at the end of March 2017, and to US$1,242 at the end of June 2017. That is a +7% gain over the half year, but it was all in the first quarter, with prices flat-lining in Q2.
In New Zealand dollars, prices moved from NZ$1,673 at the end of 2016 to NZ$1,777 at the end of March 2017, but back down to NZ$1,694 at the end of June. Over the first half, that is just a NZ$21 gain or +1.3% for half a year (less holding costs). You can understand why some investors are 'subdued'.
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