WGC: Investment in gold & jewellery increases demand in Q2 2021

Consumer investment in gold increased in the second quarter of 2021 but some investors were less bullish, according to the World Gold Council’s latest Gold Demand Trends report.
The two forces helped create a gold demand of 955.1t over the quarter, a 9% rise from Q1 2021, and in line with the equivalent period last year of 960.5t.
Between April and June, most traditional indicators of consumer gold purchasing were positive. Bars and coins - a category of physical gold products overwhelmingly bought by retail investors - saw a fourth consecutive quarter of year-on-year gains, with 243.8t purchased over the three months.
Meanwhile, consumers bought gold jewellery with a combined weight of 390.7t, 60% more than the equivalent quarter last year.
While both consumers and retail investors were purchasing again, institutional investors were less consistent. There were only modest net inflows of 40.7t during Q2 into gold Exchange Traded Funds (ETFs) financial instruments backed by physical gold whose flow “swings” are often driven by institutional buyers. These inflows only partially offset the heavy outflows the industry witnessed in the previous quarter, making 2021 the first time since 2014 with net outflows in the first six months of the year. Central banks continued to buy gold throughout the quarter. Global gold reserves grew by 199.9t in Q2.
Looking forwards, the World Gold Council estimates jewellery demand could be in the range of 1,600 to 1,800t for the year, well above 2020 levels but below its five-year average. Investment demand should be in the region of 1,250 to 1,400t – slightly less than last year but in line with the ten-year average. Central banks are likely to continue buying gold on a net basis in 2021 at the same rate or above that of 2020, and the supply of gold in 2021 is expected to increase modestly when compared to the previous year.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished