Investment Update: Gold amid higher inflation and rising bond yields in India
Strong gold ETF outflows in July, driven by a weaker gold price and momentum
Global gold ETFs registered outflows of 81t (-US$4.5bn) in July. This was the third consecutive month of outflows and the worst since March 2021. A stronger US dollar and COMEX net long positioning – the lowest since April 2019 – helped push the gold price down through the US$1,800/oz support level.
Gold Market Commentary
Gold fell 3.5% in July, leaving it down 2.9% on the year at US$1,753/oz. A strong US dollar and sticky real yields weighed on gold in the first half of July.
Gold Demand Trends Q2 2022
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.
Investment Update: Why should Japanese investors own gold?
While major Japanese and global assets have witnessed declines in H1, gold has delivered a 19% return in local currency amid a combination of rising inflation, geopolitical risks and a weaker yen.
Gold Mid-Year Outlook 2022
Investors face a challenging environment during the second half of 2022, needing to navigate rising interest rates, high inflation and resurfacing geopolitical risks. In the near term, gold will likely remain reactive to real rates, which in turn will respond to the speed at which global central banks tighten monetary policy and their effectiveness in controlling inflation.
Gold ETF demand strong year-to-date despite outflows in June
Global gold ETFs registered 28t (US$1.7bn) of outflows in June. This was the second consecutive month of outflows, following the 53t (US$3.1bn) that left these funds in May. While the recent flows were enough to push Q2 into net outflows of 39t (US$2bn), year-to-date net inflows remained positive at 234t (US$14.8bn). Total holdings at the end of June stood at 3,792t (US$221.7bn), up 6% y-t-d.
Gold refining and recycling: India gold market series
As India’s demand for gold outpaces its domestic mine supply, demand is fulfilled by imports as well as gold recycled locally. Recycling in India is a Rs440bn industry making up 11% of the average local annual supply.
May outflows from gold ETFs partially reverse recent gains
Global gold ETFs ended their four-month run of positive inflows in May, with outflows of 53t (US$3.1bn). While this was the largest monthly outflow since March 2021, total holdings remain 8% higher year-to-date at 3,823t (US$226bn).
Gold Market Commentary
Weaker investor interest weighed on gold in May