Gold demand softened in Q2

Despite Q2 weakness, strong first quarter ETF inflows fuelled a notable H1 recovery

Gold demand (excluding OTC) was 8% lower y-o-y at 948t. Combined with Q1 this took H1 demand to 2,189t, up 12% y-o-y.

The LBMA Gold price PM averaged US$1,871/oz in Q2, 3% above the Q2’21 average. However, this comparison conceals the 6% decline in the price during the most recent quarter, pressured by rising interest rates and the rocketing value of the US dollar.

As the gold price fell in Q2, gold ETFs lost 39t, giving back some of the strong Q1 gains. Net H1 inflows totalled 234t compared with 127t of outflows in H1’21.

Bar and coin investment (245t) was unchanged from Q2’21 as a sharp drop in China was offset by growth in India, the Middle East and Turkey. The H1 total saw a 12% y-o-y drop to 526t on compounded Chinese weakness.

Q2 jewellery consumer demand reached 453t, 4% higher y-o-y, although the comparison is with a fairly weak Q2’21. Total H1 jewellery demand of 928t was 2% below H1’21.

Central banks continued to buy gold. Global official gold reserves grew by 180t in Q2, taking H1 net purchases to 270t.

Technology demand dipped in Q2, down 2% y-o-y to 78t on weaker demand for consumer electronics. H1 demand was fractionally lower as a result at 159t.


ETFs fuelled a notable H1 recovery*

ETFs fuelled a notable H1 recovery*

ETFs fuelled a notable H1 recovery*
*Data to 30 June 2022. Source: Metals Focus, World Gold Council

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer

*Data to 30 June 2022.


Other highlights

The LBMA gold price PM (US$/oz) lost 6% in Q2, but firmed marginally over H1 (+1%). Much of the Q2 weakness was related to the strength of the dollar; the gold price denominated in many other currencies was contrastingly different.

Continued growth in the second quarter lifted H1 mine production 3% to 1,764t – a record first half for our data series. Mine production benefited from an absence of COVID-related lockdowns and was boosted by continued recovery in China following safety stoppages in 2021.

Recycling activity remained elevated compared with 2021. Total H1 recycling of 592t was 8% higher y-o-y. Higher average price levels, combined with increased economic hardship in many regions, supported recycling volumes.

The strict zero-COVID policy in China had a significant impact on total bar and coin investment and jewellery demand. Lockdowns imposed in several key cities and regions throughout much of Q2 meant that access to retail outlets was cut off to large swathes of consumers.

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