World Gold Investment Demand Tumbled 28% in Q3 of 2017

SEATTLE (Scrap Monster): According to the ‘Gold Demand Trends Q3 2017’ Report published by the World Gold Council (WGC), the global gold investment demand witnessed considerable decline. The growth in total bar and coin demand was offset by the sharp drop in demand witnessed in gold-backed exchange traded funds (ETFs).

The global holdings in gold-backed ETFs grew only by 18.9 tonnes during Q3 this year. The demand growth in ETF holdings dropped significantly by 87% when matched with the growth of 144.3 tonnes in the corresponding quarter last year. The holdings recorded outflow during the month of July. Inflows which resumed in August, gained further momentum in September. The cumulative inflows totaled 179.7 tonnes during the first nine months of 2017.

Geopolitical tensions continued to boost gold investment demand during the third quarter. The threat of nuclear war between the US and North Korea, Brexit-related announcements and terrorist incidents resulted in investors switching to gold as an asset. The reluctance to go ahead with fresh investments in world stock markets, with some of them already at record height, also attracted more investments to gold-backed ETFs.

Gold bar and coin demand surged higher by 17% in Q3 this year. The relative jump in demand is mainly on account of the lowest demand level during the corresponding quarter last year. The demand during Q3 2017 was below the 3-year, 5-year and 10-year quarterly averages. The demand growth was mainly due to the 57% year-on-year growth in China. The fears of a potential depreciation of the yuan coupled with regulations imposed by the Chinese administration on alternate investment opportunities such as real estate resulted in increased inflow into gold bars and coins in the country.

On the contrary, India’s gold bar and coin demand dropped sharply by 23% to total 31 tonnes during Q3 2017. The lack of clarity on GST- the newly introduced unified tax scheme led to many banks halting imports of gold on consignment basis. Meantime, Turkish bar and coin demand soared higher by almost three-folds from Q3 last year to total 15 tonnes during the third quarter 2017. The South Korean investment demand reported 42% upsurge in activity.

The European demand for gold bar and coin rose sharply by 36% over the previous year to total 45.5 tonnes. Germany recorded the biggest jump in demand. The German gold bar and coin demand was up by nearly 45% to 25.1 tonnes. However, the investment continued to remain below 5-year average.

The US bar and coin investment demand dropped to 7.3 tonnes in Q3 this year, when compared with the demand of 17.7 tonnes during the similar quarter last year.