Global rush for gold continues to surge

Global gold demand has continued to grow in the second quarter this year off the back of sustained central bank buying and growth in gold-backed exchange-traded funds (ETFs).

Demand grew to 1123 tonnes during the June quarter, representing a rise of eight per cent on the same period last year, according to the World Gold Council’s latest gold demand trends report.

Combined with the first quarter of the year, gold demand increased to 2181.7 tonnes in the first six months of 2019, an uplift of eight per cent compared with the first half of last year.

The central banks bought 224.4 tonnes of gold in the June quarter, taking first half buying to 374.1 tonnes – the largest net first half increase in global reserves in the company’s 19-year quarterly data series.

In a continuation of recent trends, buying was spread across a diverse range of largely emerging market countries.

Holdings of gold-backed ETFs grew 67.2 tonnes in the second quarter to a six-year high of 2548 tonnes, driven by continued geopolitical instability and a rallying gold price in June.

The price of the precious metal broke through $US1400 an ounce for the first time since 2013, with the price rise in the Australian currency reaching all-time record highs.

This was driven by lower interest rates, political uncertainty and further support coming from strong central bank buying.

World Gold Council head of market intelligence Alistair Hewitt said June was a big month for gold given the price surge and strong activity from central banks.

“We also saw an uptick in sales at an individual level as investors took advantage of June’s price rally to lock-in profits; jewellery recycling and retail bar and coin liquidations both rose,” he said.

“As we head into H2, we believe the factors underpinning ETF inflows and central bank buying, including looser monetary policy and geopolitical uncertainty, will continue. Consumer demand, however, may be a bit soft as people adapt to the higher price level.”

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