The World Gold Council reported a 7% decline in demand for the precious metal in the third quarter. In its latest quarterly report on demand trends published on Tuesday, it was written that the total demand for gold from July to September declined to 831 tons.
This drop was caused by the ETF fluctuating from very large inflows in the third quarter of 2020 to moderate outflows this year –eclipsing the growth in demand in other sectors during the quarter.
Gradual investment demand led to the fact that gold prices averaged $1,789.50 per ounce in the summer, which is about 1% lower compared to the second quarter and 6% lower compared to the third quarter of 2020.
Based on analysts' estimates, the profitability of gold depends on the dynamics of its supply and demand, as well as macro-environments – these are higher interest rates and investors' propensity to risk.
The WGC said that despite the fact that investment demand was low until 2021, the general market remains stable, and physical demand also continues to recover.
As for the jewelry sector, lower prices have helped boost consumer demand, even though it remains below pre-pandemic levels.
According to the WGC, the demand for jewelry in the third quarter amounted to 442.6 tons, which is 33% more than in 2020. However, analysts noted that demand is 12% below the five-year average.
The demand for jewelry in the third quarter was driven by economic recovery and improved consumer sentiment, continuing the trend of the first half of the year. Since the beginning of the year, global demand for jewelry has been almost 50% higher than in the same period in 2020.
As for the investment sector, the WGC said that total demand fell to 235 tons, which is more than 50% compared to the third quarter of 2020. The decline was caused by the fact that 27 tons of gold left the ETF market. However, the demand for physical bullion increased in the period from July to September.
The report says that the demand for gold bars and coins amounted to 261.70 tons, which is 18% more than last year.
The World Council also noted that the demand for gold from central banks remains a pillar. The report says that purchases of gold by the central bank in the third quarter amounted to 69 tons.
According to the report, the volume of purchases in 2021 in the amount of 393 tons significantly exceeded the annual volume of purchases in 2020, which amounted to 255 tons.
Steady growth continues in the technology sector. This is noticeable in industrial demand for gold, which increased by 9% in the third quarter, namely to 83.3 tons.
Despite the growth of industrial demand, the World Gold Council noted some obstacles for this sector, since the demand for personal computers and equipment is falling as workers return to the office. At the same time, the growing shortage of chips may also affect the demand of the technology sector for gold.
As for the supply on the gold market: the total supply in the third quarter fell to 1,238.9 tons, which is 3% less than last year.
The WGC stated that the mine's supply rose by 4% to almost 960 tons in the third quarter.
