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The World Gold Council reports that a strong consumer demand recovery and Q2 gold ETF inflows were not enough to offset heavy Q1 outflows

The World Gold Council reports that a strong consumer demand recovery and Q2 gold ETF inflows were not enough to offset heavy Q1 outflows

This content is sourced from the World Gold Council.


Gold demand (excluding OTC) for Q2 was virtually in line with Q2 2020 at 955.1t (-1%). That took H1 demand to 1,833.1t, down 10% y-o-y.

Q2 jewellery demand (390.7t) continued to rebound from 2020’s COVID-hit weakness, although remained well below typical pre-pandemic levels, partly due to weaker Indian demand growth. Demand for H1, at 873.7t, was 17% below the 2015-2019 average.

Bar and coin investment saw a fourth consecutive quarter of strong year-on-year gains: Q2 demand of 243.8 resulted in a H1 total of 594.t, the strongest since 2013.

Modest Q2 inflows into gold-backed ETFs (40.7t) only partly offset the heavy outflows from Q1; consequently, ETFs saw H1 net outflows (of 129.3t) for the first time since 2014.

Central bank buying continued in Q2. Global gold reserves grew by 199.9t, which took H1 net buying to 333.2t – 39% higher than the five-year H1 average, and 29% above the ten-year H1 average.

Gold used in technology continued to recover from the 2020 lows: Q2 demand was 18% higher y-o-y at 80t – in line with average Q2 demand from 2015-2019 of 81.8t. H1 demand (161t) was fractionally above that of H1 2019 (160.6t).

Q2 inflows into global gold ETFs only partly offset Q1 outflows.

Q2 was the fourth consecutive quarter of strong year-on-year growth in bar and coin investment, 56% higher at 244t.

While jewellery demand continued to recover from the COVID-hit weakness of 2020, it remained well below average pre-pandemic levels.

Highlights

Global gold ETF saw inflows of 40.7 tonnes (t) (US$2.5 billion (bn)) in Q2. Inflows were concentrated in Western markets, with US, Germany and France all seeing double-digit tonnage growth in holdings.

The US dollar gold price averaged US$1,816.5/oz during Q2, 6% higher than in Q2 2020.1 During the quarter, the price gained 4.3%, gaining support from ETF inflows and net long positioning.

Q2 bar and coin investment increased 56% y-o-y. Thailand was the largest contributor to this growth after switching from net negative investment in Q2 2020 to modest positive investment. 

Jewellery demand extended its recovery but remains relatively soft. Demand continued to normalise from 2020’s anomalous levels but has yet to return to  longer-term average levels. 

Global central bank net buying reached 200t in Q2. Large-scale purchases by Thailand, Hungary and Brazil drove this growth in global gold reserves.

Total Q2 gold supply was 13% higher y-o-y; H1 was 4% higher. The industry experienced far less COVID-related disruption than in Q2 2020 – the most interrupted quarter last year.

Footnotes

  1. All price references based on the LBMA Gold Price PM USD as of the end of the corresponding period unless otherwise noted.

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9 Comments

- Expensive to transport
- Expensive to store
- Not very divisible
- Almost impossible to audit
- Hard to verify authenticity

I like gold, I've profited off gold.. but I've sold all my gold holdings. Sorry, not sorry. Gold is heavily manipulated using paper contracts which aren't backed by physical gold. Also gold makes for ugly jewellery IMO.

Yes, central banks could print up some funny money and splash out on gold, yet that would just be desperation on their part [avoiding buying BTC] and a wet-dream of gold bugs. If gold drops to $1,300 I'll get back in. Gold could go to 5K, but really its lost creditability due to the manipulated paper market. so yeah, BEST TO STAY AWAY.

Besides we have Bitcoin now so gold is becoming a bit redundant. When I hear gold bugs taking about jewellery, I just roll my eyes.. how pathetic. OMG people are making garments by sewing dollar bills together, better convert all my money to US dollars.

Give it up.

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Why was I not surprised to find that when we get to the end of that diatribe we have the BTC nonsense. Digital nothing.

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On a personal level I’m excited, I just sold my digital nothing, that I’ve had for a while and bought an aircraft, pick it up tomorrow fizzing!

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Very nice, what are you getting?

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Well done...you sold your nothings to the greater fool.

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Right on que Rastus turns up...no counterarguements..just hot air...boring move on mate.

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"Expensive to store" - not if held in a well known bullion company
- Not very divisible - sure but then you can sell for fiat and take delivery of cash. 100g is an amount you can take physical delivery of overseas if held overseas. - "Almost impossible to audit" depends on the company you buy bullion from. Qty's are matched daily with physical, buy and sell. This is a paper exercise. Only doubt is who does the physical audit and its frequency
- "Hard to verify authenticity" Is that relevant as long as the purity is OK? Not aware of blood gold like blood diamonds.
NZ gold has an abnormal premium on the daily "world" price in USD. Also difficult to get brand name bullion in NZ. Only one or two local dealers have woken up to accept USD as payment so you don't get caught in high forex premiums.

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'The ethos "Don't Trust, Verify" undermines basically all of your above points.
At each stage you are trusting someone to:
Store it for you, assuming they actually have it?
Again, held overseas. You cant pay someone on the other side of the world $30 in gold wiht final settlement in less than an hour. Or give an entire country $30 of gold like El Salvador is with Bitcoin.
You can not audit the gold yourself, unless you melt it down and assay it with expensive tools. Cost and skill prohibitive.
https://news.bitcoin.com/83-tons-fake-gold-bars-china-scandal/#:~:text=…. Even institutions dont audit their gold...
You trust they don't just make more paper gold out of thin air? I don't. When was the last time Fort Knox was audited? not since the 70s or even earlier.
Fungibility of gold is fantastic, gold is gold so doesn't matter where it comes from.

Bitcoin beats gold hands down, its only a matter of time before it eats gold lunch. Younger generations are all digital, they dont want analogue stuff they cant move around instantly.

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Between Comex and LBMA (London Bullion Market Association) there was an interesting incident either 1st or 2nd qtr 2020. Instead of the Comex contracts being rolled over many called for physical delivery which I understand is not usually the case. Comex were running around like a scalded cat and London Bullion market got involved to supply physical gold. It was all sorted out in the end but it does go to show that paper gold influences the market.

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