Rich people and asset managers in China and different components of the area have piled into the valuable steel to assist counter their rising “considerations round credit score, debt and monetary situations,” Joseph Cavatoni, WGC’s chief market strategist for the Americas, mentioned in an interview. Holding bodily gold offers them “consolation” in immediately’s quickly evolving local weather, he added. Out of the 200 richest individuals on the earth, greater than one-quarter are primarily based in Asia, information from Bloomberg present.
Within the April to June interval, purchases within the difficult-to-track OTC market totaled 329.2 metric tons, bringing complete demand to 1,258.2 tons, based on the group’s report. That’s up 4% 12 months on 12 months. With out the power of the OTC market, demand would have dropped 6% over the identical interval, due largely to a pointy drop in jewellery consumption.
The report sheds a bit of extra gentle on the drivers on the earth’s gold market, which noticed costs climb to eye-popping highs earlier this month. Driving costs is an expectation upcoming interest-rate cuts by the US Federal Reserve would appeal to extra traders into the exchange-traded funds market. The steel has additionally been supported by continued demand from central banks and rising geopolitical tensions, together with the tumultuous US presidential marketing campaign, which increase its enchantment as a safe-haven asset.
“The undercurrent of all that is that central banks are nonetheless concerned,” Cavatoni mentioned. “India and Poland continued to purchase” whilst China slowed down, he mentioned. Gold shopping for by central banks is up 6% 12 months on 12 months however down from the brisk first-quarter tempo. On the identical time, price-sensitive customers have reined of their jewellery purchases, which fell about 18% quarter-on-quarter, based on the report.
In the meantime, OTC demand was virtually inside hanging distance of bijou consumption, lengthy one of many prime drivers of world gold demand. Rich traders just like the OTC marketplace for its opaqueness. A lot of the offers are executed by sellers or between consumers and sellers immediately, with out an change platform or clearing home.
The WGC, a world commerce affiliation of gold producers that lobbies on behalf of its members, sees costs persevering with to “preserve or slowly construct on present ranges” within the second half. Gold is already up about 15% this 12 months.
(By Nick Bartlett and Yvonne Yue Li)
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