Gold Demand Trends Q3 2018

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Includes: AAAU, AGQ, BAR, BLNG, CEF, DBP, DBS, DGL, DGLD, DGP, DGZ, DSLV, DULL, DZZ, GEUR, GHE, GHS, GLD, GLDI, GLDM, GLDW, GLL, GLTR, GTU, GYEN, IAU, IAUF, JJP, OUNZ, PALL, PGM, PHYS, PLTM, PPLT, PSLV, PTM, QGLDX, SGOL, SHNY, SIVR, SLV, SLVO, SPPP, UBG, UGL, UGLD, USLV, USV, ZSL
by: World Gold Council

Q3 demand steady; up 6.2t y-o-y

Gold demand was 964.3t in Q3, just 6.2t higher y-o-y. Robust central bank buying and a 13% rise in consumer demand offset large ETF outflows.

Bar and coin demand jumped 28% to 298.1t as retail investors took advantage of the lower gold price and sought protection against currency weakness and tumbling stock markets. Jewellery demand rose 6% in Q3 as lower prices caught consumers' attention. A growing number of central bank buyers saw demand in this sector rise 22% y-o-y to 148.4t, the highest level of quarterly net purchases since 2015. Technology registered its eighth consecutive quarter of y-o-y growth, up 1%. Sharp outflows in gold-backed ETFs offset growth across much of the gold market.

Strong central bank and consumer demand offset ETF outflows

Bar and coin investors took advantage of the price dip; demand rose 28% y-o-y. Stock market volatility and currency weakness also boosted demand in many emerging markets. China - the world's largest bar and coin market - saw demand rise 25% y-o-y. Iranian demand hit a five-and-a-half-year high.

Q3 jewellery demand saw price-led y-o-y growth of 6%. Lower gold prices during July and August encouraged bargain hunting amongst price-sensitive consumers. Growth in India and China outweighed weakness in the Middle East.

Central bank gold reserves grew 148.4t in Q3, up 22% y-o-y. This is the highest level of net purchases since 2015, both quarterly and y-t-d, and notable due to a greater number of buyers.

Demand for gold in technological applications rose in Q3 by 1% y-o-y, to 85.3t. This marks the eighth consecutive quarter of growth, primarily driven by gold's use in electronics such as smartphones, servers and automotive vehicles.

ETFs shed 103.2t in Q3. ETFs saw a 116t decline when compared with inflows of 13.2t in Q3 '17, experiencing the first quarter of outflows since Q4 2016. North America accounted for 73% of outflows, fuelled by risk-on sentiment, the strong dollar and price-driven momentum.