Worldwide demand for gold decreased in the September quarter as the industry felt the pinch of reduced exchange-traded funds (ETF) sales.
Gold demand fell 13 per cent quarter-on-quarter and seven per cent year-on-year to 831 tonnes across the three months, according to the latest Gold Demand Trends report from World Gold Council.
The precious metal recorded net gold ETF sales of 27 tonnes for the quarter, a much smaller figure compared to the pandemic-driven buying surge of 2020 which saw ETF sales top 1000 tonnes by the end of the September quarter.
Despite this, consumer purchases of gold jewellery enjoyed a 33 per cent increase year-on-year to 443 tonnes, while the demand for gold bars and coins stood at 262 tonnes for the quarter, an 18 per cent year-on-year increase.
Demand for gold used in technology was another improved performer, increasing by nine per cent year-on-year to 84 tonnes for the September quarter.
“The relatively modest outflows from gold ETFs have had a disproportionate effect on this year’s figures, outweighing positivity almost everywhere else across the board,” World Gold Council senior markets analyst Louise Street said.
“The outflows themselves are part of a bigger picture. A year ago, investors were flocking to gold, seeking a hedge against the pandemic. And gold ETFs were particular beneficiaries of these flows, adding more than 1000 tonnes over the first three quarters of the 2020.
“So, while there has been selling by gold ETF investors this year, the outflows have been modest in comparison.”
Street forecasts gold demand to be comparable to the September quarter in the short-to-medium-term, with reduced ETFs offset by gold interest elsewhere.
“Looking forward, we expect the full-year picture for gold demand to look very similar: strong consumer and central bank will mitigate losses from ETFs,” she said.
“Jewellery demand will continue to exceed last year’s levels, but investment demand in total will be weaker in 2021, despite healthy bar and coin demand.”
The gold price averaged $US1790 ($2383)/ounce throughout the quarter – down from the record highs in the third quarter of 2020, where prices topped $US2000/ounce.
Despite this, the gold price for the quarter was above its three-year, five-year and 10-year averages.