According to the latest research from the World Gold Council (WGC), demand for gold began to rise in the second quarter of 2021, but this is not enough to correct the weakness observed at the beginning of the year.
On Thursday, WGC's gold demand trends report for Q2 2021 stated that global demand for gold amounted to 955.1 tons, which was almost unchanged compared to the second quarter of 2020. However, the report notes that in the first half of the year, the overall demand for gold fell by 10%.
Despite falling demand in the first half, WGC research manager Juan Carlos Artigas said investors should look more broadly, describing the sale in the investment market as a tactical adjustment after last year's record capital inflows.
Looking at the market as a whole, the WGC said that while the yellow metal stabilized between April and June, it was unable to recover from the sharp drop in investment demand in the first three months of the year.
According to the WGC, global investment demand for gold amounted to 283.9 tons, which is 52% lower than in the second quarter of 2020. Despite the fact that the demand for ETFs was quite weak, the report notes that the demand for bullion and coins remained stable in the second quarter, increasing by 243 tons. This is 56% more than last year, but 30% less than in the first quarter of 2021.
The WGC also noted a significant improvement in the jewelry sector, which has been particularly hard hit due to the COVID-19 pandemic. The report says that the global demand for jewelry amounted to 390.7 tons. This is 60% more than last year. However, the total demand for the first half of the year amounted to 873.7 tons, which is 17% lower than the average for the last five years.
The WGC predicts that jewelry demand will continue to improve over the course of this year, but will remain below the five-year average.
With regard to two important regional jewelry markets, the report says that in the second quarter, demand for gold jewelry in China increased to 147 tons, up 67% from last year.
The second quarter is seasonally low for gold jewelry demand, but policymakers continue to focus on boosting domestic consumption through initiatives such as trade festivals that are likely to boost local gold consumption. Moreover, economic growth must also remain favorable. This was stated in the report.
India saw an increase of 25%, which amounted to 157.6 tonnes in the first half of the year, which is 46% below the figure for the first half of 2019 and 39% below the five-year average.
One of the major highlights in the gold market was the resumption of demand from central banks. According to the report the central bank bought 333 tons of gold in the first half of 2021, up 39% from the five-year average.
And also Thailand, Hungary, and Brazil were the largest buyers of gold.
Another striking but small component of the gold sector was the growth in industrial demand. The report notes that industrial demand for gold increased by 18% to 80 tons.
And in the second quarter, the demand for gold is low. But in the first half of the year, the supply increased by 4%, to 2,308 tons. Production at the mines rose 9% to 1,783 tonnes, the largest increase in the first half of the year and on record.
