Gold Buying by Central Banks Hits Highest Mark in 3 Years

Gold Buying by Central Banks Hits Highest Mark in 3 Years

Gold Buying by Central Banks Hits Highest Mark in 3 Years

$GLD

Global demand for gold rose in Q-3 compared to the same period a year ago as resurgent buying from central banks and retail consumers balanced huge outflows from exchange traded funds, the World Gold Council said on Thursday.

Demand totaled 964.3 tonnes, up from 958.1 tonnes in July-September 2017, the WGC said in its latest quarterly demand trends report.

Central banks bought 148.4 tonnes of gold in Q-3, the most for any Quarter since Y 2015, according to the WGC. Russia, Kazakhstan and Turkey continued to build their reserves, while India stepped up purchases and Poland and Hungary began buying.

The WGC expects central banks to purchase 400-500 tonnes this year.

On the supply side, mined output hit a record high of 875.3 tonnes, but less recycling and reduced hedging by miners meant overall supply fell 2% Y-Y to 1,161.5 tonnes in Q-3.

Gold consumption in the 1st 9 months of this year has been the lowest since Y 2009, according to the WGC. Exchange traded funds (ETFs) saw outflows of 103.2 tonnes over July-September after inflows of 13.2 tonnes in Q3 last year.

Almost 75% of the outflow was from funds in the United States, where a strengthening USD, rising interest rates and soaring stock markets prompted investors to sell gold, pushing prices in mid-August to their lowest in 19 months.

But low prices, along with weakening currencies and unstable stock markets in countries including Top consumer China, helped spur retail buyers, said Alistair Hewitt, the WGC’s head of market intelligence.

Gold is traditionally seen as a safe place to store assets in uncertain times.

“The rupee gold price in August fell to its lowest mark this year, the RMB Yuan gold price to its lowest in 2 years, the Euroarea gold price fell to its lowest in 2.5 years,” Mr. Hewitt said. “That just proved to be a great buying opportunity for bar and coin investors.”

Bar and coin demand surged by 28% Y-Y to 298.1 tonnes in Q-3, according to the WGC. Consumption of gold for jewelry rose 6% from a year ago to 535.7 tonnes, the highest since Q-4 of Y  2017.

In India and China, the biggest buyers, demand rose 10 percent, to 148.8 tonnes in India and 174.2 tonnes in China. Mr. Hewitt said the WGC expected overall demand this year around 700-800 tonnes in India and 900-1,000 tonnes in China.

HeffX-LTN Analysis for GLD: Overall Short Intermediate Long
Bullish (0.32) Bullish (0.33) Very Bullish (0.50) Neutral (0.13)

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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