Gold Bar and Coin Investment Demand Bounced 13% Off the Lows in Q2

SEATTLE (Scrap Monster): The ‘Gold Demand Trends Q2 2017’ Report published by the World Gold Council (WGC) suggests significant rise in gold bar and coin demand during the second quarter of 2017. The Q2 demand has surged higher by 13% when compared to the corresponding quarter last year.

According to WGC, the gold bar and coin demand totaled 240.8t in Q2 ’17 as compared with 212.9t during Q2 in 2016. The huge surge in quarterly demand is mainly on account of exceptionally weak demand during the first half of 2016. The Q2 demand stood significantly lower when compared with five-year and three-year quarterly averages of 306.1t and 263t respectively. The gold bar and coin demand during the first half of 2017 was up by 11% over the previous year, WGC Report noted.

The bar and coin demand in China totaled 62.6t in Q2 this year, rising sharply by 56% year-on-year. However, the demand remained subdued when matched with the previous quarters. In China, the demand had exceeded 100t during the last quarter of 2016 and the first quarter of 2017. The direct purchases from Shanghai Gold Exchange (SGE) accounted for bulk of the bar and coin demand in the country. Indian demand for gold bar and coin surged higher by 26% over the previous year to total 40.7t. The sales during the gold buying festival of Akshaya Tritiya alone accounted for 15% of the country’s total quarterly demand.

In Turkey, retail investment demand hit its highest level since 2013, mainly on the back of recovery in economic growth and further strengthening of local currency. The 9% decline in local gold prices between April and May too boosted gold investments. On the other hand, the bar and coin demand in the US hit the lowest level since Q3 2013, falling to 10.2t during Q2 ’17. The demand during the first half of 2017 was down significantly by 21.5t when compared with H1 2016. The European demand remained flat at 40.3t during the quarter.

The global gold demand for gold-backed Exchange Traded Funds (ETFs) dropped significantly by 76% during April-June quarter in 2017 to 56t. The demand had totaled 237.4t during the corresponding quarter in 2016. The buoyant Western markets were offset by huge drop in holdings of Chinese ETFs. The Chinese ETF holdings have dropped by almost 9t during the quarter. ETF Investments remained buoyant in the US and Europe. In fact, European region accounted for more than three-fourth of the total global inflows during Q2 this year. The gold holdings in European-listed ETFs surged to all-time highs during the quarter.