In Q3 Gold Demand Down 7% To 831 Tonnes: WGC

In a recent report titled 'Gold Demand Trends - Q3 2021' by the World Gold Council (WGC), it has been mentioned that in Q3, gold demand has been down by 7% to 831 tonnes (t). "This drop has been mostly driven by ETFs, which swung from very large inflows in Q3, 2020 to modest outflows this year - overshadowing strength in other sectors of demand during the quarter."

Additionally, Jewellery, technology, and bar and coin segment have been significantly higher than in 2020. According to the report, jewellery segment has continued to attract strength from the ongoing global economic recovery, So, in Q3, demand rebounded 33% y-o-y to 443 tonnes. On the other hand, Bar and coin investment increased 18% y-o-y to 262 tonnes.

Technology gold demand has increased 9% y-o-y, driven by continued recovery in electronics. The demand of 84t is back in line with pre-pandemic quarterly averages.

Fall in gold ETF demands

The report has mentioned, "Unsurprisingly given its y-t-d performance, we expect investment demand in total to be weaker in 2021 compared to a stellar 2020." But the gold ETF demands globally have fallen significantly. According to WGC, "Small outflows from global gold ETFs (-27t) had a disproportionate impact on the y-o-y change in gold demand, given the hefty Q3'20 inflows of 274t." A vast outflow in ETFs was experienced from the USA, while a regional breakdown reveals that both European and Asian ETF demand has been healthy.

(Also read: What Are The Differences Between Gold ETFs And Gold Funds)

How are the central banks reserving?

Globally, the central banks continued to buy gold in large numbers, even in India. The RBI's gold reserves stood at a record level this year. But, the pace fell in the recent quarters. The report stated, Global reserves grew by 69t in Q3, and almost 400 y-t-d. Modest central bank purchases were a solid improvement on the small net sale from Q3'20, but supply was down 3% y-o-y due to a significant drop in recycling.

WGC mentioned that Q3 started quite promising for gold, which was boosted by dovish US Federal Reserve rhetoric and sharply lower nominal and real 10-year Treasury yields. But, the latter fell to an all-timelow of -1.2% by the beginning of August. The report added, "However, the positive momentum was short-lived and gold failed to capitalize, edging down 0.6% during a tumultuous but ultimately flat August. By September, 'gold-positive' news resulted in brief gains, but they could not contain an m-o-m decline of 4%. A persistent rise in the US dollar also took its toll. But despite net outflows from gold ETFs and falling net longs in futures markets, gold ended the quarter down only 1.2%."

(Also read: How To Invest In Gold ETF In Mobile App? Benefits Of Buying Gold ETF)