Insights

Watch today’s Gold Demand Trends webinar where we discussed the key shifts in gold demand during Q3 2019 as the price reached a six-year high.

Last month, we launched the Responsible Gold Mining Principles (RGMPs), a new framework that sets out clear expectations for consumers, investors and the downstream gold supply chain as to what constitutes responsible gold mining. In this video, Gary Goldberg, at the time CEO of NewmontGoldcorp, Mick Wilkes, CEO of OceanaGold and I discuss why we developed the RGMPs, investor expectations around ESG and expectations as to how the mining industry will evolve over the next 5 to 10 years.

It’s old news that the world economy is suffering. Ongoing trade tensions between the US China (and elsewhere too), the draining Brexit saga, as well as a myriad of other geopolitical uncertainties, have taken their toll. Global growth is slowing, and investors are downbeat on world economic prospects. Recession in many major economies is now a real possibility... As a result, central banks around the world have been busy cutting rates.

• Indian gold imports reached just 26.3t in September 2019 – 61% lower than the same month last year.
• The domestic gold price was 2.4% lower in September compared to August, but 18.7% higher y-t-d.
• With weak physical demand, the discount in the local gold market reached a peak of US$55/oz in September, but narrowed to US$29.5/oz by the end of the month.
• Monsoon levels in 2019 are the highest for 25 years; Kharif sowing almost flat y-o-y.

• The Shanghai Gold Benchmark price saw a modest decline in September, with the local gold premium falling sharply due to the stabilising currency and increasing gold imports.
• Led by the declining gold price and the soft physical demand, both Au(T+D) and Au9999’s trading volume dropped last month while loadouts from the Shanghai Gold Exchange (SGE) levelled off.
• After hitting the lowest level since 2017 in July, gold imports to China rebounded in August.
• The People’s Bank of China (PBoC) added another 6t to its gold reserves in September. After ten consecutive purchases, the PBoC now holds 1,948t gold in its reserves.

Last week, I was delighted to be asked to speak at the inaugural Responsible Asset Owners Global Symposium in London . More and more investors are – quite rightly – thinking about how to incorporate environmental, social and governance (ESG) factors into their investment choices. But there is still a lot of uncertainty about what this means, and in particular, what framework investors should use to assess ESG performance

Yesterday, the International Monetary Fund released their updated World Economic Outlook. And, if investors were looking for any seeds of optimism, may I suggest reading The Art of Happiness by the Dalai Lama instead?

The US Federal Reserve has cut rates twice in recent months and the market expects more of the same, as economic conditions become increasingly uncertain in the US and across the globe. Gold has already benefited from the shift in sentiment and Harry Tchilinguirian, head of commodity research at BNP Paribas, believes it will continue to do so.

Today we have published our latest central bank data for August. As usual, I’ll be summarising the key highlights. But if you want to dig a little deeper, you can find our central bank data set here.

• Inflation is on the rise in China, reaching 2.8% in August 2019, the highest in 18 months; leading economists expect it to rise further by the end of the year
• African swine flu has wiped out a third of China’s pig livestock since last August, contributing substantially to the rising inflation
• Looking back at history, when inflation rose above 3% the nominal return of the local gold price has averaged 17%

• The domestic gold price was 10.3% higher in August compared to July, outpacing the LBMA gold price which rose by 7%
• Indian gold imports reached just 28.2t in August 2019 – 70% lower than the same month last year and lowest level since January 2018
• With elevated domestic gold prices and a higher custom duty, the discount in the local gold market widened out as far as US$55/oz in August
• Monsoon rainfall is 5% above Long Period Average (LPA) with Kharif sowing just 0.2% lower than last year; normal monsoon and healthy sowing bodes well for rural gold demand in Q4 2019.

I was in Shenzhen earlier this month attending various events held by major jewellers and industry bodies such as the Shenzhen Gold and Jewellery Association.

Attracting around 2,300 Chinese jewellers, the Shenzhen International Jewellery Fair 2019 is China’s leading jewellery conference and exhibition, showcasing cutting-edge innovations and exciting developments in China’s jewellery market.

Gold rallied on Friday following the LBMA fix which left the fix price flat on the week and XAU higher (XAU +2%, LBMA -0.1%) as yields fell following the Fed rate cut which left the market thinking the ‘organic growth’ Powell discussed could represent future QE.

• In August, Shanghai Gold Benchmark (PM) rose 11% to 355 yuan/gram and the local gold premium peaked at a six-year high.
• While Au(T+D)’s trading volume in August surged to a new all-time high, gold withdrawals from the Shanghai Gold Exchange (SGE) declined again last month.
• Gold imports dropped to 44t in July, the lowest since 2017.
• The People’s Bank of China (PBoC) added another 6t to its gold reserves in August.

On 17 September, independent asset management firm First Eagle outlined the benefits that it believes gold and gold mining stocks can bring to an investment portfolio. Today, First Eagle discusses gold’s role in detail and assesses the current drivers for performance.