The World Gold Council report on July says that the dollar was strong and gold investment weak during the month. Gold fell 3.5% in July, leaving it down 2.9% on the year at $1,753/oz.
A strong US dollar and sticky real yields weighed on gold in the first half of July. But softer inflation expectations mid-month and Jobless Claims a few days later in the US nudged the dollar and real rates down. These reversals also coincided with extended positioning in futures markets for currencies, gold and, to a lesser extent, rates.
China: China’s gold demand was robust in July. First, total holdings in Chinese gold ETFs saw a notable rise, mainly driven by opportunity-buying amid a lower local gold price combined with risk-off sentiment and higher safe-haven demand as the local stock market fell.
India: Retail demand remained tepid in July due to muted rural demand, the wedding season drawing to a close and the higher import duty on gold. Retail demand saw marginal improvement during the third week of the month due to a correction in the domestic gold price, however consumers held back purchases in expectation of a further correction to come.
Europe: With inflation expected to have reached a new all-time high in July, the European Central Bank (ECB) increased its policy rate by 0.5%, exiting its negative interest rates policy with the first increase in 11 years. The ECB also introduced a new debt crisis tool aimed at avoiding a surge in borrowing costs for vulnerable economies. But despite the continued less-than-rosy picture for the region, holdings in European gold ETFs sold off during the month, led by significant outflows in UK funds.
US: US Mint data shows that gold coin sales (American Eagle and Buffalo) totalled 104,000 oz in July, below the y-td average of 158,000 oz. Annualising current sales suggest that 2022 could surpass full-year 2021 sales of 1.6mn oz, reaching an estimate of 1.9mn oz.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished
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