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Gold demand falls 9% in Q3

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Staff Writer | November 10, 2017
Global gold demand in Q3 2017 was 915 tonnes (t), a drop of 9% compared with the same period in 2016, according to the World Gold Council’s latest Gold Demand Trends report.
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This decline was led by two key factors: a softer quarter in the jewellery sector and significantly lower inflows into exchange-traded funds (ETFs).

Global jewellery demand was down 3% year-on-year in Q3, as the newly introduced Goods & Services Tax and tighter anti-money laundering regulations around transactions in India deterred buyers.

While ETFs had another quarter of positive inflows, these fell far short of the remarkable 144t influx into the sector in Q3 2016.

By contrast, demand from other sectors consolidated: central bank demand was healthy in Q3, up 25% year-on-year to 111t, while bar and coin investment strengthened by 17% to 222t, albeit from a low base.

Gold jewellery demand fell in Q3 2017. A weak quarter in India was the main reason for the year-on-year decline in global demand, down from 495t in Q3 2016 to 479t in Q3 2017. Jewellery volumes continue to languish below longer-term average levels.

Tax and regulatory changes in India weighed on domestic gold demand. The new GST regime deterred consumers, as did new anti-money laudnering regulations governing jewellery retail transactions.

Inflows into gold-backed ETFs stalled: holdings grew by just 19t. Investors continued to favour gold’s risk-hedging properties, but the greater focus was on buoyant stock markets.

Gold bar and coin demand growth was driven in large part by China. Global investment in bars and coins rose by 17%, from relatively weak year-earlier levels. Mainland investors in China bought on price dips, clocking up a fourth consecutive quarter of growth.

Central bank demand of 111t in Q3 was 25% higher year-on-year. Russia and Turkey together added nearly 95t of gold to global official reserves.

Volumes of gold used in technology increased for the fourth consecutive quarter. Strong demand for LEDs and continued growth in the use of 3D sensors in new smartphones boosted demand by 2%.