Between April and June, most traditional indicators of gold buying by consumers were positive. Bullion and coins – a category of physical gold commodities bought heavily by retail investors – posted a fourth consecutive quarter of year-over-year gains, with 243.8 tonnes purchased in the three-month period.
Meanwhile, consumers bought gold jewelry with a combined weight of 390.7 tons, 60% more than the equivalent quarter last year.
While consumers and retail investors bought again, institutional investors were less consistent. There were only modest net inflows of 40.7 tonnes in the second quarter into gold exchange-traded funds (ETFs) – financial instruments backed by physical gold whose flow “swings” are often driven by institutional buyers. These inflows only partially offset the strong cash outflows the sector witnessed in the previous quarter, making 2021 the first time since 2014 with net outflows in the first six months of the year.
Central banks continued to buy gold throughout the quarter. World gold reserves increased by 199.9 t in the second quarter.
Looking ahead, the World Gold Council estimates jewelry demand could be between 1,600 and 1,800 tonnes for the year, well above 2020 levels but below its five-year average. Investment demand should be in the order of 1,250 to 1,400 t, a little less than last year but in line with the ten-year average. Central banks are expected to continue buying gold on a net basis in 2021 at the same rate or above that of 2020, and the supply of gold in 2021 is expected to increase slightly from the previous year.
Louise Street, Senior Market Analyst at the World Gold Council, said: “As the global economic recovery continues, we have been encouraged by the return of consumer demand, with strong year-over-year growth. in jewelry. But investing is a more complex picture Despite evidence of strategic buying by individuals and institutions, tactical investors had a more mixed impact in the first half of the year. -disabled. ”
“Looking ahead, we expect continued improvement in the consumption elements of demand for the remainder of the year. And while ETFs are unlikely to repeat the record performance of 2020, the need for effective risk hedges and the continued low interest rate environment supports our view that investors will increase their strategic allocations throughout the year, ”he said. he added.