Slowdown in ETF Inflows Drives 4% Decline in Gold Demand in Q2 2018 | Business Wire

LONDON–(BUSINESS WIRE)–Global gold demand remained muted in Q2 2018 at 964 tonnes (t), 4% below

the same period in 2017, according to the World Gold Council’s latest

Gold Demand Trends report. Slower inflows into gold-backed

exchange-traded funds (ETFs) created a weak comparison against the highs

of last year, contributing to the lowest H1 demand since 2009. Whilst

China, the world’s largest gold market, saw a 7% rise in consumer demand.

ETF inflows continued, albeit at a much slower pace compared with the

high levels seen in 2016 and 2017. Inflows were down 46% y-o-y.

However, European-listed funds saw decent inflows we believe due to

uncertainty stemming from Italian elections and monetary policy outlook.

In contrast, holdings of North American-listed funds fell by 30.6t as

investors focused on domestic economic strength.

Despite the Q2 decline, H1 jewellery demand was scarcely changed at

1,031t. Weaker demand in India and the Middle East in Q2 was only

partly offset by growth in China and the US, both up 5% compared with

the previous year. Indian demand fell 8% y-o-y, crimped by higher local

prices, as well as by seasonal and religious factors.

Q2 2018 saw the seventh consecutive quarter of year-on-year growth in

the technology sector, with demand up 2% to 83t. Gold used in

electronics continued to thrive, due to enduring demand for smartphones,

games consoles and vehicles. H1 demand reached a three-year high of 165t.

Global bar and coin investment was virtually unchanged at 248t. Stronger

demand in China and Iran – fuelled by increasing geopolitical tensions

with the US – were offset by falls in Turkey, India and Europe, where

local prices remained elevated.

Central banks added 89t of gold to global official reserves in Q2

2018, down 7% compared with Q2 2017. Cumulative H1 2018 purchases of

193t were the highest since 2015. Alongside the familiar cast list of

Russia, Turkey and Kazakhstan, the Reserve Bank of India returned to the

market, albeit with only a very small purchase (+2.5t).

Alistair Hewitt, Head of Market Intelligence at the World Gold Council,


“It’s interesting how investors around the world have reacted to some

of the risks stalking financial markets. Weaker economic prospects and

tumbling currencies off the back of heightened tensions with the US

boosted Chinese and Iranian gold demand, while US investors shrugged off

any geopolitical concerns. Demand from tech companies continued to grow,

with H1 demand reaching a three-year high, while economic growth boosted

jewellery demand in the US with Q2 demand hitting a ten-year high.”

The total supply of gold increased by 3% in Q2 2018 to 1,120t, supported

by increased mine production and recycling growth. Mine production in Q2

saw a rise of 3% to 836t, the highest Q2 on record, as projects in

Russia, Indonesia and Canada continued to ramp-up. Gold recycling also

grew, as currency weakness in India, Turkey and Iran boosted local gold

prices and encouraged consumers to lock in profits from their holdings.

The key findings included in the Gold Demand Trends Q2 2018 report

are as follows:

  • Overall demand was 964t, a decrease of 4% compared with 1,008t

    in Q2 2017

  • Total consumer demand fell by 1% to 758t, from 767t in the same

    period last year

  • Total investment demand was down 9% to 281t compared with 310t

    in Q2 2017

  • Global jewellery demand fell 2% to 510t, from 519t in the same

    period in 2017

  • Central bank demand decreased by 7% to 89t compared with 96t in

    Q2 2017

  • Demand in the technology sector increased 2% to 83t compared

    with 81t in Q2 2017

  • Total supply was up 3% to 1,120t, from 1,086t in the same

    period last year

  • Recycling was up 4% to 295t, compared with 283t in Q2 2017

The Gold Demand Trends Q2 2018 report, which includes

comprehensive data provided by Metals Focus, can be viewed at http://www.gold.org/research/gold-demand-trends

and on our iOS

and Android

apps. Gold Demand Trends data can also be explored using our interactive

charting tool http://www.gold.org/data/gold-supply-and-demand/gold-market-chart.

You can follow the World Gold Council on Twitter

at @goldcouncil and Like on Facebook.

Note to editors:

World Gold Council

The World Gold Council is the market development organisation for the

gold industry. Our purpose is to stimulate and sustain demand for gold,

provide industry leadership and be the global authority on the gold


We develop gold-backed solutions, services and products, based on

authoritative market insight and we work with a range of partners to put

our ideas into action. As a result, we create structural shifts in

demand for gold across key market sectors. We provide insights into the

international gold markets, helping people to understand the wealth

preservation qualities of gold and its role in meeting the social and

environmental needs of society.

The membership of the World Gold Council includes the world’s leading

and most forward-thinking gold mining companies.

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