Robust Gold ETF Inflows Offset Massive Dip in Bar and Coin Demand

SEATTLE (Scrap Monster): The total investment demand edged higher marginally by 1% in Q2 this year, says the latest Gold Demand Trends Report published by the World Gold Council (WGC). Firm inflows into gold-backed ETFs offset huge decline in bar and coin investment demand during the quarter.

The total holdings in global gold-backed ETFs reported significant growth by 67.2t during the quarter to reach 2,548t. The UK-listed funds reported greatest inflows in Q2. Around 75% of all global inflows during the quarter were directed towards these products, mainly due to Brexit concerns and currency weakness.  The Germany-based funds also reported modest inflows. The holdings in the UK and German-listed funds surged higher by 11% and 2% respectively in second quarter 2019.

On the other hand, the retail investment demand for bars and coins remained soft in Q2. The investment stalled in June, due to the recent huge rally in gold prices. The demand dropped for the third consecutive quarter, falling by 12% over the previous year to 218.6t. The Chinese demand slumped by almost 29%. The global demand during the initial six months of 2019 totaled 476.9t, which is the lowest level since 2009.

The bar and coin demand rose by 13% in India during the quarter. The demand in the Middle East was down by 27% to 15.7t, due to drop in Iranian demand. The huge drop in demand in Thailand impacted the East Asia region bar and coin investment demand, WGC report noted.