Gold Demand in Q2 Faces Challenges Amid Economic Headwinds
In the second quarter, gold experienced a decline in central-bank and investor demand, facing challenges due to macroeconomic headwinds, elevated gold prices, and rising interest rates, as reported by the World Gold Council (WGC).
The overall gold demand in the second quarter decreased by 2% compared to the same period last year, totaling 921 metric tons. This decline was primarily driven by reduced central-bank demand and lower-than-expected investor demand. In contrast, the first three months of the year witnessed significant gold buying, amounting to 1,141.5 tons.
Central-bank buying faced a substantial 35% year-on-year decline, reaching 102.9 tons. This figure also represented a striking 63% fall from the first quarter's purchase of 284 tons. The reduction in central-bank buying was attributed partly to Turkey, which temporarily became a net seller of gold during April and May. However, Turkey's net selling stance was tactical, and the country returned to being a net purchaser in June.
Despite the challenges, central-bank buying for the first half of the year reached a record 387 tons, with the People's Bank of China contributing 103 tons to this total.
Exchange-traded funds (ETFs) experienced outflows of 21.3 tons in the second quarter, compared to 28.7 tons in the first quarter. However, over-the-counter (OTC) purchases remained steady at 334.5 tons, up from 232.5 tons during the same period last year. Overall, investment demand showed a 20% year-on-year increase, totaling 256.1 tons.
The WGC had anticipated strong ETF and OTC demand at the beginning of the year, but this scenario did not unfold precisely as expected, particularly for ETFs. Factors like the resilience of the U.S. economy and strong equity markets impacted demand. As a result, the report suggests that without significant changes, the second half of the year may witness lackluster demand.
However, strong OTC demand supported the WGC's overall demand forecast. The WGC predicts that bullion bank restocking in China, Indian inflows, and shifts from ETF to vaulted demand in Turkey will drive future demand.
Bar and coin demand, up 6% year-on-year, reflected consumer concerns about inflation. As individuals seek assets that retain value over time, gold becomes more attractive.
Gold jewelry demand stood at 476 metric tons, showing a 3% increase compared to the previous year, despite high gold prices. The growth was particularly evident in China due to its post-Covid-19 lockdown recovery. However, Indian demand remained more subdued in the high-price environment.
The gold prices averaged $1,976 per troy ounce during the second quarter, marking a 6% year-on-year increase and a 4% rise from the previous record set in the third quarter of 2020.
XAUUSD
BUY 1957 - 1955 🕯
✔️ TP1: 1962
✔️ TP2: 1965
✔️ TP3: 1970
❌ SL: 1952
The overall gold demand in the second quarter decreased by 2% compared to the same period last year, totaling 921 metric tons. This decline was primarily driven by reduced central-bank demand and lower-than-expected investor demand. In contrast, the first three months of the year witnessed significant gold buying, amounting to 1,141.5 tons.
Central-bank buying faced a substantial 35% year-on-year decline, reaching 102.9 tons. This figure also represented a striking 63% fall from the first quarter's purchase of 284 tons. The reduction in central-bank buying was attributed partly to Turkey, which temporarily became a net seller of gold during April and May. However, Turkey's net selling stance was tactical, and the country returned to being a net purchaser in June.
Despite the challenges, central-bank buying for the first half of the year reached a record 387 tons, with the People's Bank of China contributing 103 tons to this total.
Exchange-traded funds (ETFs) experienced outflows of 21.3 tons in the second quarter, compared to 28.7 tons in the first quarter. However, over-the-counter (OTC) purchases remained steady at 334.5 tons, up from 232.5 tons during the same period last year. Overall, investment demand showed a 20% year-on-year increase, totaling 256.1 tons.
The WGC had anticipated strong ETF and OTC demand at the beginning of the year, but this scenario did not unfold precisely as expected, particularly for ETFs. Factors like the resilience of the U.S. economy and strong equity markets impacted demand. As a result, the report suggests that without significant changes, the second half of the year may witness lackluster demand.
However, strong OTC demand supported the WGC's overall demand forecast. The WGC predicts that bullion bank restocking in China, Indian inflows, and shifts from ETF to vaulted demand in Turkey will drive future demand.
Bar and coin demand, up 6% year-on-year, reflected consumer concerns about inflation. As individuals seek assets that retain value over time, gold becomes more attractive.
Gold jewelry demand stood at 476 metric tons, showing a 3% increase compared to the previous year, despite high gold prices. The growth was particularly evident in China due to its post-Covid-19 lockdown recovery. However, Indian demand remained more subdued in the high-price environment.
The gold prices averaged $1,976 per troy ounce during the second quarter, marking a 6% year-on-year increase and a 4% rise from the previous record set in the third quarter of 2020.
XAUUSD
BUY 1957 - 1955 🕯 ✔️ TP1: 1962
✔️ TP2: 1965
✔️ TP3: 1970
❌ SL: 1952
