Research library

Q2 gold demand of 953.4t was 10% lower than 2016, while H1 demand slowed 14% to 2,003.8t. 

The gold market is broad and complex, so producing statistics on demand and supply is challenging. But having such statistics is crucial to understanding the fundamentals of the market. 

Global gold demand in Q1 2017 was 1,034.5t. The 18% y-o-y decline suffers from the comparison with Q1 2016, which was the strongest ever first quarter. Inflows into ETFs of 109.1t, although solid, were nonetheless a fraction of last year’s near-record inflows. 

A barrage of policy initiatives aimed at purging India of black money and instilling greater transparency rocked India’s economy last year, including its gold market. The most dramatic was the radical decision to demonetise over 15 trillion rupees, around US$220bn. 

2016 full-year gold demand gained 2% to reach a 3-year high of 4,308.7t. Annual inflows into ETFs reached 531.9t, the second highest on record. Declines in jewellery and central bank purchases offset this growth.

In 2015 India was the world’s fast growing economy; in recent years millions have been lifted out of poverty and India’s middle class has swelled. This is important because our econometric analysis indicates income growth drives gold demand. 

China has gone through remarkable change in the past 30 years. Within one generation, the shape of our economy has altered beyond all recognition: agriculture’s share of output has fallen and the service sector has become an important driver of growth.

Following a remarkable performance year-to-date, the gold price fell by over 3% on 4 October, taking it below US$1,300/oz for the first time since the Brexit announcement in June 2016.

Continued growth in Q2 2016 (+15%) brought total H1 gold demand to 2,335t – the second highest first half on record.