By Will Horner
Gold demand fell within the third quarter as buyers bought their holdings in gold-backed exchange-traded funds as the valuable metallic’s value was saved in examine by a rising greenback and better bond yields, in line with the World Gold Council.
Complete gold demand stood at 831 metric tons within the third quarter. That was 7% decrease year-on-year, and 13% decrease than within the earlier quarter, the WGC mentioned in its quarterly Gold Demand Traits report.
General gold demand fell attributable to waning demand from buyers for gold-backed ETFs, a development which counteracted a rise in demand for gold jewellery, central financial institution shopping for, and investor demand for bodily gold bars and cash, the WGC mentioned.
Gold ETFs swung from optimistic, however already waning inflows within the second quarter, to web outflows of 26.7 tons within the third quarter, the WGC’s knowledge exhibits.
2020 was marked by sizable inflows into gold funds as costs rose to a document excessive and the coronavirus battered world financial progress. That development has halted this yr nevertheless and begun to reverse.
Gold costs, which fell again from their document excessive of $2,063.80 a troy ounce, have spent most of this yr hovering round $1,800 an oz. In the meantime, with bond yields rising and rate of interest hikes on the horizon buyers really feel the outlook for the valuable metallic has dimmed.
“The outflows themselves are a part of an even bigger image. A yr in the past, buyers had been flocking to gold, searching for a hedge towards the pandemic. And gold ETFs had been specific beneficiaries of those flows,” mentioned Louise Avenue, senior market analyst on the WGC.
Contrasting with ETFs, demand from the jewellery trade rose 32% year-on-year to 156.8 tons. Demand from the trade through the pandemic was the mirror picture of institutional investor demand: slumping on the peak of the disaster as shoppers reduce and jewellery hubs in India and China had been shuttered by lockdown measures, however recovering since.
Central financial institution shopping for additionally rose within the quarter after they had been web sellers of gold reserves in the identical interval final yr. Central banks purchased a complete of 69.3 tons of gold, which compares to gross sales of 10.6 tons within the third quarter final yr.
Bar and coin demand rose by 18% within the third quarter of 2020, totaling 261.7 tons.
Write to Will Horner at firstname.lastname@example.org