The World Gold Association released the second quarter of 2019 Gold Demand Trends Report, and analyzed the latest gold demand trends. In the second quarter of 2019, global gold demand grew to 1,123 tons, an 8% year-on-year increase. This growth is mainly due to the continued purchases of gold by central banks and the increase of gold ETF inflows. With the first quarter of this year’s data, gold demand rose to 2,181.7 tons in the first half of 2019, an 8% increase over the previous year.

Key data

The total demand for gold increased by 8% to 1,123 tons in the current quarter, compared with 1,038.8 tons in the same period in 2018.

Total demand for gold consumption fell to 750.3 tons in the current quarter, compared with 769.0 tons in the same period in 2018.

The total demand for gold investment in this quarter was relatively stable, increasing by 1% to 285.8 tons, compared with 282 tons in the same period in 2018.

Global demand for gold jewelry grew by 2% to 531.7 tons in the current quarter, compared with 520.8 tons in the same period in 2018.

The total demand of central banks increased by 47% to 224.4 tons in the current quarter, compared with 152.8 tons in the same period in 2018.

Total demand in the technology sector fell 3% to 81.1 tons in the current quarter, compared with 83.3 tons in the same period in 2018.

Total gold supply rose to 1,186.7 tons in the current quarter, compared with 1,121.3 tons in the same period in 2018.

The supply of recovered gold increased by 9% to 314.6 tons in the current quarter, compared with 289.8 tons in the same period in 2018.

Expert Interpretation

Wang Lixin, Managing Director of the World Gold Association:

From this quarter’s data, central bank purchases became the highlight of China’s gold demand in the second quarter of 2019. China’s gold reserves grew by 74 tons in the first half of the year, of which net monthly purchases increased slightly in the second quarter, bringing the average monthly purchases in 2019 to 12.3 tons from 11 tons in the first quarter. Reserve diversification and demand for safe and liquid assets are the main driving forces of central bank purchasing funds.

It is worth mentioning that, driven by the exhibition activities of the gold jewelry industry and the continuous innovation and development of high-end products, even in the traditional off-season, China’s demand for gold jewelry in April and May is relatively optimistic. In addition, consumers continue to pay attention to the more innovative and harder high-end products developed by the industry in recent years. But on the other hand, because of the rapid and sustained rise in gold prices in the short term, it may restrain gold consumption and investment demand. Highlights of the report

In the second quarter of 2019, central banks around the world purchased 224.4 tons of gold. This led to a total of 374.1 tons of central bank purchases in the first half of the year – the largest net increase in the world’s official gold reserves in our 19-year quarterly historical data. Influenced by the recent sustained trend, more central banks joined the ranks of purchasing funds, mainly for emerging market countries.

Global gold ETF holdings grew by 67.2 tons in the second quarter, reaching a six-year high of 2,548 tons. The main drivers of this growth include continued geopolitical instability, pigeon comments on monetary policy by some central banks, and a sharp rise in gold prices in June.

Demand for gold jewelry in India recovered strongly in the second quarter, rising 12% to 168.8 tons. Busy wedding season and steadily growing holiday sales boosted demand for gold jewelry in the region, while the sharp rise in gold prices in June stalled its consumption of gold jewelry. Rising demand in India pushed global demand for gold jewelry up 2% year-on-year in the quarter, totaling 531.7 tons.

Global investment demand for gold bars and coins fell 12% to 218.6 tons in the second quarter. In the first quarter, investment demand for gold bars and coins was equally weak, resulting in only 476.9 tons of gold bars and coins in the first half of 2019, the lowest half-year demand in a decade. China’s investment demand for gold bars and coins fell 29% year-on-year in the second quarter, which is the main reason for the decline in global aggregate.

Global gold supply grew by 6% in the second quarter to 1,186.7 tons. Driven by the sharp rise in gold prices in June, gold production reached an all-time high of 882.6 tons in the second quarter, while recovery jumped 9% to 314.6 tons. Overall, global gold supply reached 2,323.9 tons in the first half of the year, the highest level since 2016.

Gold prices soared to their peak in years. Gold climbed in June, breaking through $1,400 an ounce for the first time since 2013. Gold prices in other currencies rose more significantly. The main factors driving up the current round of gold prices include interest rate cuts and political uncertainty, while strong gold purchases by global central banks are also an important support for gold prices.