29 October, 2020

Q3 global investment of 494.6t increased 21% y-o-y, while y-t-d volume increased by 63%.

  • Bar and coin demand recovered in Q3 to 222.1t, as improved emerging market demand joined still-strong Western investment
  • ETF inflows continued in Q3, although at a slower rate than in H1. Additions of 272.5t in Q3 were 5% higher y-o-y
  • Holdings in gold-backed ETFs reached a new record of 3,880t in Q3. 
Tonnes Q3'19 Q3'20   YoY
Investment 408.1 494.6 21%
Bar & coin 149.4 222.1 49%
  India 22.3 33.8 51%
  China, P.R.:Mainland 42.8 57.8 35%
Gold-backed ETFs 258.7 272.5 5%

Global investment demand for gold (incorporating retail investment in gold coins and small gold bars as well as inflows into gold-backed ETFs) reached 494.6t in Q3. This was 21% higher than the Q3 2019 total. 

Bar and coin investment saw widespread y-o-y growth, in some contrast to Q2 when disinvestment was commonplace across Eastern markets. Thailand was the most notable exception, where selling of existing gold investments continued apace as a means of relieving the economic hardship arising from the pandemic.  

The strong rise in the gold price to record highs in early August attracted a certain degree of momentum investing, while the continued global economic stress due to the global pandemic underpinned gold’s role as a risk hedge and protector of wealth. The ongoing low-to-negative rate environment also remained firmly in gold’s favour.  


Holdings in gold-backed ETFs hit 3,880t in Q3, another all-time high, as investment into these products grew by 272.5t. Although still substantial, the rate of increase was lower than the first half of 2020, when 300t were added in the first quarter and 431t in the second. During the first nine months of the year in total, 1,003t were added globally: inflows in Q3 marked the eighth successive quarter of net inflows into gold-backed ETFs. 

In value terms, global assets under management (AUM) climbed to US$235.4bn, a sharp increase compared to US$141.1bn at the end of 2019.

Although positive in each month, total inflows were uneven throughout the quarter. July was by far the strongest month with 165.6t added to holdings, as the gold priced trended strongly higher (+11%). But after the price reached a new record high above US$2,000/oz in the first few days of August, before correcting and then consolidating around US$1,900/oz, inflows slowed. August saw growth of only 38.8t, the smallest increase of the year so far. September saw a recovery, with 68.1t added, although this was still much slower than in July, which commanded 61% of the quarter’s total inflows. 


YTD inflows into gold ETFs breach 1,000 tonnes

YTD inflows into gold ETFs breach 1,000 tonnes

Data as of

Sources: Bloomberg, Company Filings, ICE Benchmark Administration; Disclaimer


Some slowing in purchases was unsurprising after the halt in the rapid gold price gains: we had signalled that gold’s run was looking unsustainable in the short-term in a blogpost in late July. But sustained inflows through the quarter demonstrate that investors remain attracted to gold and we believe that the motivations behind ETF investors’ purchases are largely unchanged. 

  1. Ongoing need to hedge risk. With the global economy still hobbled by the coronavirus pandemic, the sustainability, strength and shape of the recovery continues to be questioned. Although some equity markets have recovered from earlier losses, share strength is narrow, concentrated in stocks that have prospered from the sudden changes in the economy and/or are set to benefit in the recovery. Weakness in US stocks in September may have encouraged the recovery in gold ETF buying seen that month, despite a stronger dollar.
  2. Ultra-low interest rates and widespread fiscal support. Central bank and government actions to combat a pandemic-driven economic contraction continued during the quarter and with many Northern Hemisphere nations facing rapid increases in reported infections, more of the same looks likely, although the looming US elections appear to be delaying the passage of another stimulus package.
  3. Mixed gold price momentum. Gold delivered a 25% return in the year to 30 September – proving to be one of the best performing major asset classes – and this strength has been one factor encouraging investors to add gold or increase portfolio weightings. But after gold corrected from its highs in early August, some shorter-term investors monetised gains and reduced positioning.  

All regions saw inflows in Q3. North American-listed funds saw by far the largest share, attracting 70% of the global volume inflow. Holdings in the region grew by 190.9t to stand at 2,089.4t (AUM US$126.8bn) by the end of the quarter, accounting for 54% of the global total. Funds in the region saw net additions in each month of the quarter. 

European-listed funds accounted for 54.9t, or 20% of global additions during the quarter, but saw net redemptions of 10.6t in August, the first monthly decline in holdings in this region since November 2019. Redemptions from German-listed funds were the main drivers of these outflows, with a 12.5t decline noted in August, slowing to a 1.6t outflow in September. Consequently, German-listed funds reported declines in holdings of 5.7t for Q3, their first quarterly decline since Q3 2017. Based on our conversations with providers, we believe this was largely due to profit taking from longer-standing holders.

Asian-listed gold-backed ETFs saw their highest ever reported quarterly inflows of 20.7t in Q3, taking holdings in this region to an all-time high of 121t by the end of September. Purchases from China dominated, helped by the listing of four new funds in the third quarter, bringing the total of new listings so far this year to seven. Inflows into these new funds contributed to the addition of 13.1t to total China-listed ETFs in the three months to end-September. Indian-listed funds also saw good growth during the quarter, adding 4.6t. 

Funds listed in other regions added 6.1t during the quarter, with Australia adding 5.3t of the total. With total gold stocks of 65.4t at the end of the quarter, holdings in other regions are approaching the previous all-time high of 70.6t seen in November 2009. 

Gold ETF inflows have continued in October, with North American- and European-listed funds dominating net purchases. Modest inflows into Asian-listed funds have offset outflows from funds listed in other regions.

Bar and coin

Investment in gold bars and coins in Q3 increased 49% y-o-y to 222.1t. The majority of the countries we track saw sequential improvements in bar and coin demand in Q3 as economies began to emerge from lockdown and the supply chain bottlenecks seen earlier in the year eased. Following this strong quarterly recovery, y-t-d bar and coin demand was flat compared with the same period in 2019, even after the weakness seen earlier this year. The value of bar and coin demand – US$34.9bn y-t-d – has increased sharply due to gold’s strong price performance this year. 

China’s gold bar and coin demand of 57.8t in Q3 represents a significant increase, both on a q-o-q and y-o-y basis. But at the same time, selling back of gold by retail investors also increased due to profit-taking. Despite the strength seen in Q3, y-t-d demand in China is 17% lower than in the comparable period in 2019. 

The local gold price hit a record high in the first half of Q3 and attracted widespread attention from retail investors. With the local gold price surging in July and reaching the record high early August, gold generated tremendous attention from investors, contributing to the surge in China’s bar and coin sales during the quarter. And according to our previous analysis, a rise in the gold price tends to lift bar and coin demand in China during the same period as most retail gold investors are trend followers.  

Lingering global uncertainties combined with improved economic conditions in China also helped. A volatile equity market in China alongside geopolitical uncertainties in the third quarter helped lift local safe-haven demand, driving inflows into Chinese gold ETFs  as well as bar and coin demand. At the same time, a renormalisation of local economic activity, better financial conditions, growth in key indicators such as GDP (+4.9% y-o-y in Q3) and disposable income (+2.8% y-o-y) supported retail demand which has also been historically correlated to positive economic growth.    

Large scale disinvestment in Thailand was again reported in Q3, with 45.2t of net sales exceeding the already-high levels seen in the second quarter. Y-t-d, net disinvestment of 80.1t from Thailand is in sharp contrast to the 24.5t of investment seen in the first three quarters of 2019. Demand this year has been hit by a combination of higher prices and the collapse in visitor numbers in a country largely dependent on tourism. Job losses and lower income levels at a time of rapidly rising gold prices prompted a surge of disinvestment as Thai investors used their gold holdings to fund their financial needs.  

Japan saw a seventh consecutive quarter of net disinvestment, with investors selling a net 2.3t of gold bars and coins in Q3. Net sales declined marginally compared to the 2.4t seen in Q2, and occurred against a backdrop of good gross purchases and only slightly stronger net sales. To date, net sales of 11.3t in 2020 compares favourably to the 17.1t of selling seen in the first nine months of 2019. 

Investment across the rest of the East Asian region was mixed: at 4.8t, bar and coin demand in Vietnam was down 48% y-o-y, while Indonesia saw 5.5t of demand after heavy investor buying more than reversed the net disinvestment of Q3 2019. 

Indian bar and coin demand increased 51% y-o-y to 33.8t in Q3, although y-t-d demand remains depressed at 81.6t (-19% y-o-y). Particularly strong investment demand was noted in July and August. Among retail investors, small bars (of 50g denominations or less) were especially popular. Although India continues to experience a particularly difficult time with the coronavirus pandemic, the country has been carefully opening up and access to gold became much easier in Q3.

India’s rural economy, normally responsible for about 60% of annual gold demand – is performing particularly well in 2020 after the second successive year of good monsoon rains and higher crop yields supported prices. This has likely helped bar and coin demand outside of the urban areas. We have also heard that large bullion dealers and chain stores with an extensive retail network and online presence have reported strong figures. This suggests that the small investment product business has shifted to cashless trade.

There were also reports of investment demand for kilobars in the unofficial market; the slowdown in real estate and rising gold prices may have prompted unaccounted cash holders to move into gold. 

Bar and coin demand in Turkey was again one of the stand-out positives in Q3. Demand increased more than seven-fold to 48.5t, the highest quarterly total on record and after already-strong buying in H1. Over the first nine months of the year, Turkish bar and coin investors have bought 91.8t of gold, nearly treble the amount bought during the same period in 2019. Safe-haven appeal has triggered this surge in demand, with a combination of domestic inflation, negative local real interest rates, lira weakness, and gold price momentum leading to strong interest in gold in Turkey. 

Bar and coin investment in Iran was 24% higher y-o-y, supported by safe haven buying in the face of high local inflation: distress selling prevented net demand from being even higher, as did moves by the central bank to slow gold coin demand. Elsewhere, the Middle East Region saw improved bar and coin investment in Q3 in most markets with Saudi Arabian demand up 10%, UAE up 40% and Kuwait 45% higher y-o-y. 


Official gold coin buying surges to a YTD record

Official gold coin buying surges to a YTD record

Data as of

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


Western investors remained strong buyers of gold bars and coins in Q3, building on the heavy purchases seen in the first half of 2020, even though total purchases slowed slightly compared to Q2. Most of the supply-chain interruptions that had hampered investors’ access to physical investment products in Q2 eased during the third quarter, with still-elevated premiums below the highs seen earlier in the year. 

Q3 bar and coin demand in the US more than quadrupled y-o-y to 19.2t, higher than the 14.1t seen in Q2 and the strongest quarter since Q4-16. This took y-t-d purchases to 48.9t, more than treble the demand seen in the same period of 2019. We believe that there was an element of catch-up in the Q3 purchases, as availability of popular one-ounce coins improved, while fractional coins and one-ounce bars remained in short supply. Premiums for one-ounce coins therefore eased during the quarter. Purchases slowed after the correction in gold in early August but picked up again when investors regained confidence that gold was not set to fall further. Aside from the largely economic factors driving gold earlier in the year, some pre-US election buying was reported.

European investors bought 52.1t of gold in Q3, slightly less than the 69.4t purchased in Q2, but 65% higher y-o-y. Germany, with 32.3t of purchases (up 81% y-o-y), Switzerland (10.2t, up 57% y-o-y) and to a lesser extent the UK (3.1t, up 28% y-o-y) and Austria (2.4t, up 128% y-o-y), were the major buyers during the quarter. Negative real – and in some cases nominal – interest rates amid an ongoing economic downturn remained the key driver of European gold demand during the quarter, although the rapid price appreciation in July and early August reportedly deterred some buyers. The pull-back in the prices during August and September saw renewed interest as investors hunted for bargains. 

Important disclaimers and disclosures [+]Important disclaimers and disclosures [-]