Gold demand driven by investment demand in the 2nd quarter and first half of the year – Commerzbank

The World Gold Council has published data on Gold demand in the second quarter. At just under 1,250 tons, demand was a good 3% higher than in the previous year. Given that the price of Gold rose by more than 40% compared to the same quarter last year, this is remarkable. Excluding the residual category “OTC and other,” the increase was even 10.4%, Commerzbank's commodity analyst Carsten Fritsch notes.

WGC expects significantly stronger investment demand than last year

"This was mainly due to a strong 78% increase in investment demand, primarily driven by continued strong ETF inflows. Investment demand thus exceeded the normally stronger demand for jewelry. This reflects the increased demand for Gold as a safe haven, while jewelry demand suffered from high prices and therefore remained 14% below the previous year's level. There are also signs of a slowdown in Gold purchases by central banks. These fell by 21% year-on-year to their lowest level in three years."

"A look at the first half of the year shows a similar picture. Investment demand more than doubled year-on-year to nearly 1,030 tons, driven by strong ETF inflows and robust bullion and coin purchases. The latter recorded their strongest first half in 12 years. This was offset by notable declines in jewelry demand and central bank Gold purchases."

"Demand for Gold, including OTC and others, was 1% higher in the first half of the year than in the previous year (excluding this component, the increase was 13%). For the year as a whole, the WGC expects significantly stronger investment demand than last year, but lower fabrication demand (jewelry, technology) and lower Gold purchases by central banks."