Global gold demand was steady in Q3 2018 at 964 tonnes, up just 6 tonnes year-on-year, according to the World Gold Council’s latest Gold Demand Trends report.
Robust central bank buying and a 13 per cent rise in consumer demand offset large outflows in gold-backed exchange-traded funds (ETFs).
Lower gold prices saw retail investors take refuge in bars and coins, while jewellery purchases increased in India, China and across South-East Asia, the report said.
Bar and coin investors took advantage of the price dip, with demand up 28 per cent year-on-year. Stock market volatility and currency weakness boosted demand in many emerging markets. China, the world’s largest bar and coin market, saw demand rise 25 per cent to 86 tonnes year-on-year. Iranian demand hit a five-and-a-half year high at 21t.
Lower gold prices during July and August encouraged bargain hunting among price-sensitive consumers. Growth in India and China, up 10 per cent in each region, outweighed weakness in the Middle East, which was down 12 per cent.
Central bank gold reserves grew by 148 tonnes in Q3 2018, up 22 per cent year-on-year. This is the highest level of net purchases since 2015, both quarterly and year-to-date.
Demand for gold in technological applications rose in third quarter by 1 per cent year-on-year, to 85 tonnes. This marks the eighth consecutive quarter of growth, primarily driven by gold’s use in electronics such as smartphones, servers and the automotive industry.
ETF outflows reached 103 tonnes in Q3 2018. North America accounted for 73 per cent of the outflows, fuelled by risk-on sentiment, a strong dollar and price-driven momentum.
The physical market responded quickly when the gold price breached US$1,200/oz in August, with retail investors around the world diving into the market.
“The equity sell-off last week is a timely reminder of the threats stalking markets: valuations are stretched, debt levels are high, and rising rates and quantitative tightening pose risks that an allocation to gold can help hedge,” said Alistair Hewitt, Head of Market Intelligence at the World Gold Council.