The World Gold Council’s third quarter report: Global gold demand fell by 7% year-on-year, and ETFs cooled gold bars and gold coins were favored

On October 28, the World Gold Council released the latest "Global Gold Demand Trend Report". The report shows that in the third quarter of 2021, the total global gold demand reached 831 tons, down 7% year-on-year and 13% month-on-month, mainly due to a small outflow of gold ETF holdings. However, demand for gold jewellery, technology gold, and investment in gold bars and coins are significantly better than 2020. Compared with the sharp sell-off in 2020, global central banks have steadily increased their gold purchases this quarter, successfully recording net purchases. In addition, the supply of gold fell by 3% compared to the third quarter of last year due to the plunge in gold recycling.



In the third quarter, global gold jewellery demand rebounded 33% year-on-year to 443 tons; gold bullion and gold coin investment increased by 18% year-on-year to 262 tons; global gold ETF holdings decreased by 27 tons, and its total holdings remained at a high level of 3592 tons . Central banks continue to buy gold, although the pace of purchases has slowed in recent quarters. In the third quarter, global gold reserves increased by 69 tons, approaching 400 tons. Driven by the continued recovery of electronic products, demand for technology gold increased by 9% year-on-year to 84 tons, returning to the quarterly average before the epidemic.

The following chart shows the demand for the jewelry technology industry, gold bullion and coin investment, gold ETFs and related products last year and the third quarter of this year, as well as the gold purchases by the central bank and other institutions



Data from the same period shows that the average gold price in the third quarter of 2021 was US$1789.5 per ounce, which was lower than the same period in 2020 (the highest record in US dollar gold prices), but higher than the same period in the past 3, 5 and 10 years. Average.

The demand for gold jewellery is recovering, but it has not yet returned to the level before the epidemic

The World Gold Council’s report pointed out that in the third quarter of this year, global gold jewellery consumption totaled 443 tons, an increase of 33% year-on-year, but it has not yet returned to the level before the epidemic.

The demand for gold jewelry in the third quarter was driven by the economic recovery and improved consumer confidence, continuing the growth trend in the first half of the year. Compared with the same period in 2020, the global jewelry industry's demand for gold has increased by nearly 50%.

Despite the strong recovery in demand, in the long term, quarterly demand for jewellery remains relatively sluggish. The demand in the third quarter of this year was 6% lower than the third quarter of 2019 and 12% lower than the five-year average.

Due to strong pent-up demand, rebound in economic activity and lower gold prices, India's demand for gold jewellery in the third quarter increased by approximately 60% month-on-month and year-on-year. Turkey's jewelry demand jumped 41% in the third quarter, which is the third consecutive quarter of year-on-year growth. Demand in the United States increased by 12% year-on-year to 32 tons. Consumer confidence across Europe continued to improve. In the third quarter, demand for gold jewellery in the region increased by 19% year-on-year to 12.2 tons, roughly returning to the level before the epidemic.

In the third quarter of Indonesia’s gold jewellery demand increased by 56% year-on-year to 7 tons, Thailand’s demand increased by 39% year-on-year to 2 tons, Vietnam’s demand fell by half year-on-year to 1 ton, Singapore’s demand fell to 1 ton for the third consecutive quarter, and Japanese demand Increased by 15% to 4 tons, South Korea demand increased by 6% to 4 tons.

As shown in the chart below, gold jewellery demand has experienced a strong recovery last year and this year, but it is still below the average level before the epidemic.

Gold ETF investment declines, gold bullion and gold coin investment demand continues to grow

In the third quarter of 2021, global gold ETF holdings decreased year-on-year, but gold bullion and gold coin investment increased.

Global gold ETF investment fell by 27 tons in the third quarter of this year, a sharp drop compared to the same period last year. However, the global gold ETF holdings are still relatively stable, only 7% lower than the peak



Global demand for gold bars and gold coins increased year-on-year for the fifth consecutive quarter. Purchases in the third quarter alone reached 262 tons, an increase of 18% year-on-year, of which gold bullion investment increased by 56% to 178 tons.

As shown in the figure, the investment in gold bars and coins in the first three quarters of this year will reach the investment volume for the entire year of 2019 and 2020.



In the third quarter, Indian gold bullion and gold coin investment increased by 27% year-on-year to 43 tons, due to pent-up demand and falling gold prices. The demand for gold bars and coins in Turkey has fallen sharply year-on-year. Investment in gold bars and coins in the United States increased by 31% to 29 tons. Investment in gold bars and coins in Europe increased by 22% to 58 tons. The investment in gold bars and gold coins in Japan turned positive, but only 2 tons.

The investment in gold bars and coins in the third quarter of other countries is as follows:
Indonesia: a year-on-year increase of 15% to 6 tons;

Thailand: Net sales of 45.2 tons are converted to net purchases of 7 tons:

Vietnam: Investment is halved to 2 tons, which is far lower than the level before the epidemic;

Malaysia and Singapore: down 52% and 23% respectively

Global central banks' enthusiasm for buying gold improves

According to data from the World Gold Council, in the third quarter of this year, the pace of gold purchases by global central banks declined, with net purchases of 69 tons of gold, a 64% decline compared with the second quarter, but a similar situation compared with the net sales in the third quarter of 2020. It's much better than that. Since the beginning of 2021, central banks of various countries have increased their reserves of gold by 69 tons, and the amount of gold purchased in the first three quarters has reached 393 tons, easily exceeding the total annual purchases in 2020 (255 tons). Among them, the central banks of Brazil, Uzbekistan and India have the highest purchases of gold.

In the third quarter of this year, the central bank of India’s gold reserves increased by 41 tons to 745 tons, the central bank of Brazil increased by 9 tons, and the central banks of Uzbekistan, Kazakhstan and Russia purchased 26 tons, 7 tons and 6 tons respectively.

Although the purchase volume in the third quarter was average, compared with 2020, the central bank's purchases this year have increased significantly.

Tech gold demand has returned to pre-epidemic levels

In the third quarter, the demand for technology gold increased by 9% year-on-year to 84 tons, which has returned to the pre-epidemic level. The demand for gold in the electronics industry increased by 9% year-on-year to 69 tons.

Demand from other industries continued to recover strongly, increasing by 10% year-on-year to 12 tons. In the third quarter, dental gold demand fell by 8% year-on-year to 3 tons.

Gold demand in the world's four major electronics manufacturing centers increased again in the third quarter. Japan, Mainland China and Hong Kong SAR, South Korea and the United States recorded increases of 10.3%, 6.9%, 9.4% and 12.3% respectively.

Gold supply declined slightly

In the third quarter, the supply of gold fell by 3% year-on-year, because the recycling of gold fell sharply, offsetting the impact of mine output growth.

Mine production in the third quarter increased by 4% year-on-year to 960 tons, the highest quarterly production level in history, and was 3% higher than the third quarter of 20191. However, due to factors such as the fall in gold prices, gold recovery fell by 22% year-on-year and 16% from the third quarter of 2019. In this way, so far this year, the total supply of gold is still slightly lower than the level before the epidemic.

As shown by the dark green bars in the figure below, the amount of gold recovered has dropped significantly compared to the same period last year.



The World Gold Council stated that the outlook for the full year of 2021 is basically the same as the performance of gold demand in the first three quarters of this year. The continued economic recovery will benefit the demand for gold jewellery and technology use ; at the same time, it is expected that continued inflation concerns will support the growth of gold. Investment demand, but compared with the record inflows in 2020, the current demand for gold ETFs is still weak. In addition, the positive attitude of central banks will make this year's net purchases of gold higher than the average level of previous years.