Gold Demand Steadies as Jewelry Buyers Counter Falling Investor Appetite

Gold demand was little changed in the first half of the year as a rebound in consumer demand for bars, coins and jewelry counteracted waning appetite from institutional investors, the World Gold Council said Thursday.

Global demand for the precious metal stood at 1,833 metric tons in the first half of the year, 10% less than during the same period in 2020, the WGC said in its quarterly report. Demand in the second quarter stood at 955.1 tons, largely unchanged from the same period last year and roughly 17% higher than the previous quarter.

The first half of the year was marked by diverging attitudes to gold demand from consumers and institutional investors. While consumers upped demand for physical gold investments and jewelry, institutional investors largely shed their gold holdings--trends that counteracted one another.

Demand for jewelry, a sector that was hit particularly hard in 2020 by coronavirus lockdowns, continued to rebound in the second quarter of the year. Demand rose to 390.7 tons, 60% higher on year. That helped take demand for the first six months of the year to 873.7 tons.

Of the two key jewelry-buying markets of China and India, Chinese consumers showed a faster-growing appetite for gold jewelry as India faced continued challenges from the Delta variant of Covid-19. Chinese gold demand rose 62% in the quarter on year, and in India demand rose by 25% on year.

Investment demand was more mixed. Buyers of bars and coins, who tend to be individual investors, increased their demand. That only partially counteracted outflows from gold-backed exchange-traded funds which tend to be favored by institutional investors.

Total investment demand in the second quarter fell 51% to 284.5 tons. Of that, bars and coins demand rose 56% while demand from gold ETFs fell 90%. Over the first half of the year, investor demand stood at 455.9 tons, 60% lower on year.

"As the global economic recovery continues, we have been encouraged to see consumer demand returning," Louise Street, senior markets analyst at the WGC, said. "But investment is a more complex picture," she said.

The WGC said it expects jewelry demand to be in the range of 1,600-1,800 tons for the whole year, above the levels of 2020, but below more typical years. Investment demand is likely to be between 1,250-1,400 tons.

Write to Will Horner at william.horner@wsj.com


  (END) Dow Jones Newswires
  07-29-21 0014ET
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