Disappointing investment demand continues to dominate the gold market after the World Gold Council (WGC ) reported a 7% drop in precious metal demand in the third quarter. Accompanied by analysts’ evaluation of the important topics of the WGC report kryoptokoin.com We have prepared for our readers.
“The performance of gold is consistent with the macro environment”
In its latest Quarterly Demand Trends report released on Tuesday, WGC announced that total gold demand between July and September fell to 831 tonnes. Analysts make the following assessments in the report:
This decline was driven almost exclusively by ETFs, which overshadowed strength in other demand sectors during the quarter. It has swung from massive inflows in the third quarter of 2020 to modest exits this year. Jewellery, technology, bullion and coins were significantly higher than in 2020.
While sluggish investment demand caused gold prices to drop by the summer average of $1,789.50, about 1% compared to the second quarter and 6% compared to the third quarter of 2020, analysts’ approach is as follows:
Gold’s performance is consistent with the dynamics of supply and demand and the macro environment of higher interest rates and risk-averse investor appetite. A bright start, a flat middle and a weak end sum up a lackluster quarter for gold price in the third quarter.
“Demand for gold jewelery driven by economic recovery and improved consumer sentiment”
While investment demand is scant at best through 2021, WGC says the overall market is resilient. WGC also notes that physical demand continues to recover from the effects of the COVID-19 pandemic. Looking at the jewelery industry, low prices have helped boost consumer demand, albeit below pre-pandemic levels. WGC states that in the third quarter, jewelry demand increased by 33% compared to 2020, reaching 442.6 tons. But analysts remind us that demand is 12% below the five-year average:
In the third quarter, gold jewelery demand was driven by the economic recovery and improved consumer sentiment, and this trend continued through the first half of the year. Year-to-date global jewelery demand is almost 50% higher than in the same period in 2020.
Looking at the investment sector, WGC says total demand fell to 235 tons, down more than 50% from the third quarter of 2020. According to the report, the decline is due to 27 tons of gold escaping the ETF market. Looking beyond the headline numbers, however, WGC notes that demand for physical bullion increased between July and September. In the report, it is stated that the demand for gold bullion and coins is 261.70 tons, an increase of 18% compared to last year. Analysts make the following assessment:
Strong third-quarter growth was supported by a number of factors, including continued COVID restrictions in many countries, continued fears about rising inflation, and August’s price drop that prompted many investors to buy.
Analysts state that increasing chip scarcity may also affect the tech sector’s demand for gold.
The WGC also notes that central bank gold demand remains a pillar of strength. The report states that central bank gold purchases totaled 69 tons in the third quarter. Analysts say that with net purchases of 393 tons year-to-date, the 2020 annual total (255 tons) was comfortably exceeded and they are ready to reach a significant total in 2021. WGC also reports solid growth in the tech sector as industrial demand for gold rose 9% in the third quarter to 83.3 tonnes. Analysts’ statement is as follows:
As much of the world emerges from the COVID-19 pandemic, rising consumer confidence has created strong demand for big-ticket items like gadgets and high-end consumer electronics devices.
Despite growth in industrial demand, WGC notes some headwinds for this industry as workers return to the office and demand for personal computers and equipment falls. Analysts state that increasing chip scarcity may also affect the gold demand of the tech sector. On the supply side of the gold market, WGC notes that in the third quarter, total supply decreased by 3% year-on-year to 1,238.9 tons, as recycling decreased in the gold market. On the other hand, WGC says mineral supply increased by 4% in the third quarter to approximately 960 tons. Analysts share the following information:
Recycled gold supply fell 22% year-on-year and was 16% lower than in the third quarter of 2019 due to the low gold price and depleted market supply.
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