More Stories

Informist, Wednesday, Oct. 30, 2024

 

Please click here to read all liners published on this story

--WGC: Global gold demand in Jul-Sept at 1,313 tn, up 5% on year
--CONTEXT: WGC releases Gold Demand Trends report for Jul-Sept
--WGC: Global gold investment demand in Jul-Sept 364.1 tn, up 132% on yr
--WGC: Jul-Sept global demand for gold bars, coins at 269.4 tn, down 9%
--WGC: Jul-Sept global gold ETF inflow 94.6 tn vs 139.1-tn outflow yr ago
--WGC: Global gold demand for jewellery in Jul-Sept at 458.6 tn, down 12%
--WGC: Central banks bought 186.2 tn gold in Jul-Sept, down 49% on year
--WGC: Global gold supply in Jul-Sept 1,313 tn vs 1,249.6 tn year ago
--WGC: Avg gold price in Jul-Sept at record $2,474.3/oz, up 28% on yr
 

 

MUMBAI – Global demand for gold rose 5% on year to a record high of 1,313 tonnes in the September quarter, the World Gold Council said in its Gold Demand Trends report released Wednesday. In terms of value, the demand jumped 35% on year to exceed $100 billion for the first time ever, it said.

 

The major driver of growth was global gold exchange traded funds, which recorded inflows of 95 tonnes, the report said. Jul-Sept was the first quarter of inflows into these funds since the first quarter of 2022. In Jul-Sept 2023, there were outflows of 139 tonnes, the report said.

 

Over-the-counter investment doubled to 137 tonnes from a year ago, according to the report. This was the seventh consecutive quarter in which over-the-counter investment has been positive for gold demand and remains a notable component of the market, it said. 

 

"A 'fear of missing out factor' amongst investors has been a key driver of increased demand this quarter. Investors have shown an appetite to buy into the price momentum, are encouraged by the prospect of future interest rate decreases, and are also considering gold's role as a safe haven in the face of US political uncertainty and escalating conflicts in the Middle East (West Asia)," said Louise Street, senior market analyst at WGC.

 

However, demand for gold jewellery and bar and coin investments fell on a yearly basis. Gold jewellery consumption was 459 tonnes, down 12% on year, despite strong growth in India. Although consumers bought a lower amount of gold, their spending on gold jewellery increased and, therefore, the value of demand for gold jewellery jumped 13% on year to more than $36 billion, according to the council. 

 

China, the largest gold importer, saw its weakest third quarter since 2010, with gold jewellery demand 36?low the 10-year average. The country's total gold jewellery consumption fell 33% on year to 103 tonnes, the report showed. However, the largest importer recorded a quarterly increase of 19% from 86.2 tonnes in the June quarter. This increase was attributed to demand during Chinese Valentine's Day, the mid-Autumn festival, and the National Day Holiday.

 

"Consumers increasingly favoured lighter-weight pieces across all categories in the high gold price environment. And gold jewellery retailers continue to experiment with innovative, higher-margin products combining gold with various materials including enamel, diamonds, pearls and feathers," the report said.  

 

The situation was completely different in India, the second-largest importer of the yellow metal. Owing to the lower customs duty on gold, the country's gold jewellery consumption rose 10% on year and 61% from the previous quarter to 171.6 tonnes, the report said.  

 

The cut in India’s gold import duties in July sparked a revival in gold jewellery demand, which saw its strongest third quarter since 2015, the WGC said. On Jul. 23, the Indian government cut the customs duty on gold to 6% from 15%. "Momentum in consumer demand picked up sharply in late July and remained strong until the mid-September arrival of the inauspicious Shradh period," the report said. 

 

Demand for bars and coins fell 9% on year to 269.4 tonnes during Jul-Sept, while total investment demand for the yellow metal rose 132% to 364.1 tonnes. "Much of the decline was specific to two or three key markets, counterbalanced by a very strong quarter in India," the WGC said. 

 

However, the year-to-date demand for bars and coins remains higher at 859 tonnes, compared to the 10-year average of 774 tonnes. "Geopolitical risk, concerns of economic slowdown and the gold price surge are fuelling these strong numbers even as record prices might keep some buyers at bay," the report said. 

 

Meanwhile, buying by central banks slowed in the third quarter, down 49% on year, though demand remained robust at 186.2 tonnes due to a sharp rise in prices, prompting a pause in buying by some central banks and limited tactical selling by others. Gold prices continue to climb as participation from investors broadens amid increasing media attention on the stellar returns, the global body said.

 

"We expect buying for the full year to remain strong but below the last two years, and leave our (full year) FY expectations virtually unchanged from last quarter's estimate," WGC said.

 

Demand from the technology sector also increased during Jul-Sept, rising 7% to 83 tonnes, and that from the electronics sector rose 9% to 69 tonnes, the report said. "The third quarter is generally the strongest for electronics demand as many major electronics companies launch new products and devices onto the market," the report said. 

 

Gold prices averaged a record high of $2,474.3 an ounce in the September quarter, up 28% on year and 6% higher than the previous quarter. "Q3 saw increased investment and over-the-counter activity prop up global gold demand and drive price performance. While the higher gold price dampened demand in the majority of consumer markets, the import duty cut in India kept jewellery and bar and coin demand remarkably high in a record-breaking price environment," Street said.

 

SUPPLY

Globally, supply of gold was up 5% on year at 1,313.0 tonnes in Jul-Sept. Production from mines rose 6% on year to 989.8 tonnes. "Although all-in-sustaining costs have increased, softer energy prices and a soaring gold price have helped maintain very healthy margins," the report said. "It may therefore be expected that this will translate into further gains in Q4 (fourth quarter), slightly bumping up the (fully year) FY outlook.

 

"Recycling has been slow to respond to high prices, and reports of a depletion of near-market stocks in both China and Western markets should put a lid on a ramp up in recycled supply in Q4," the WGC said. "We see more downside than upside risk to recycling and have revised down our full-year forecast." 

 

"Looking ahead, the step-change in gold investment flows is a trend that is likely to continue, which could keep both demand and price levels elevated. On the other hand, we've seen over 30 record price highs in 2024, and that environment will continue to be challenging for consumers. However, the prospect of economic growth is another factor we will be watching that could tip the scales," Street said.  End

 

US$1 = INR 84.08

 

Reported by J. Navya Sruthi

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.