Insights

In November, central banks reported adding 27.9 tonnes – on a net basis – to global official gold reserves, 43% lower than October’s increase. On a year-to-date basis, this brings cumulative net purchases to 570.2t, 11% higher the same period in 2018 (515.2t).

Today, we released our annual 2019 gold-backed ETF flows summary which highlights the significant investment demand for gold in 2019, along with an updated and improved ETF flows section.

Summary

• Indian gold imports were 62.3t in October 2019 – 11% lower than the same month last year
• The domestic gold price declined by 2% in November, ending the month 20% higher than the end of 2018
• With the onset of the wedding season in November, the local market was back in premia of US$1/oz on 6th November after trading at discount for more than five months, but lower than expected wedding volumes pushed the market back into discount by end of November
• Late withdrawal of the monsoon, with heavy rainfall in several states of India, damaged kharif crops, leading to more than 50% of kharif crops trading below the minimum support price (MSP) due to high moisture content and little progress in procurement of crops from government . This will impact rural income in Q4 2019

Summary

• The Shanghai Gold Benchmark price (PM) extended its decline in November. The appreciating USDCNY has again made CNY-denominated gold prices weaker than the dollar gold price, resulting in another drop in local gold premium last month.
• Driven by elevated price volatility, Au(T+D)’s trading volume was higher m-o-m. Meanwhile, the industry’s stocking ahead of the Chinese New Year’s Festival led to a higher Au9999 trading volume and gold withdrawals from the Shanghai Gold Exchange (SGE) in November. • During the first ten months of 2019, China’s gold imports dropped by 41% y-o-y.
• While some investors have stepped away, Chinese gold ETFs’ gold holdings stabilised around the highest level since last October.
• The People’s Bank of China (PBoC) left its gold reserve unchanged at 1,948t in November.

Summary

• Indian gold imports were 38.3t in October 2019 – 15% lower than the same month last year
• The domestic gold price rose by 3.1% during October, ending the month 22.4% higher than the end of 2018
• With the festival of Dhanteras in October and onset of wedding season in November, the discount in the local market narrowed to US$3/oz by end of October from a discount of US$29.5/oz at end of September
• Late withdrawal of the monsoon, with heavy rainfall in several states of India, damaged the kharif crops and more than 60% of kharif crops traded below the minimum support price (MSP) in October due to high moisture content and little progress in procurement of crops from government.

Our latest central bank data is now available on Goldhub and makes for interesting reading. Looking at the latest statistics on gold, monthly increases (of a tonne or greater) in gold reserves have begun to ease over the past three months. In October, reported net purchases totalled a healthy 41.8t, but this was 16% lower than September (49.6t), which itself was 16% lower than August (59t).

• The Shanghai Gold Benchmark price fell slightly in October as the appreciating USDCNY offset the rise in US dollar-denominated gold price. This pushed the local gold price to a discount, the first in 12 months
• Impacted by the weak performances of CNY-denominated gold prices, speculative demand dropped further. Trading volume of Au9999 continued its decline during the month on weaker physical gold demand
• During the first ten months of 2019, China’s gold imports dropped by 41% y-o-y
• Three new gold-backed ETFs were approved in October, raising the total number of gold-backed ETF products in China to seven
• The People’s Bank of China (PBoC) didn’t purchase any gold in October, leaving its gold reserves at 1,948t.

Today we’ve published our Retail gold insights 2019 report, a thematic analysis of our new consumer research survey. With a base of 18,000 participants across India, China, Russia, Germany, the US and Canada, we believe it is the largest ever consumer survey on the global gold market.

Watch today’s Gold Demand Trends webinar where we discussed the key shifts in gold demand during Q3 2019 as the price reached a six-year high.

• Indian gold imports reached just 26.3t in September 2019 – 61% lower than the same month last year.
• The domestic gold price was 2.4% lower in September compared to August, but 18.7% higher y-t-d.
• With weak physical demand, the discount in the local gold market reached a peak of US$55/oz in September, but narrowed to US$29.5/oz by the end of the month.
• Monsoon levels in 2019 are the highest for 25 years; Kharif sowing almost flat y-o-y.

• The Shanghai Gold Benchmark price saw a modest decline in September, with the local gold premium falling sharply due to the stabilising currency and increasing gold imports.
• Led by the declining gold price and the soft physical demand, both Au(T+D) and Au9999’s trading volume dropped last month while loadouts from the Shanghai Gold Exchange (SGE) levelled off.
• After hitting the lowest level since 2017 in July, gold imports to China rebounded in August.
• The People’s Bank of China (PBoC) added another 6t to its gold reserves in September. After ten consecutive purchases, the PBoC now holds 1,948t gold in its reserves.

Today we have published our latest central bank data for August. As usual, I’ll be summarising the key highlights. But if you want to dig a little deeper, you can find our central bank data set here.

• The domestic gold price was 10.3% higher in August compared to July, outpacing the LBMA gold price which rose by 7%
• Indian gold imports reached just 28.2t in August 2019 – 70% lower than the same month last year and lowest level since January 2018
• With elevated domestic gold prices and a higher custom duty, the discount in the local gold market widened out as far as US$55/oz in August
• Monsoon rainfall is 5% above Long Period Average (LPA) with Kharif sowing just 0.2% lower than last year; normal monsoon and healthy sowing bodes well for rural gold demand in Q4 2019.

On 17 September, independent asset management firm First Eagle outlined the benefits that it believes gold and gold mining stocks can bring to an investment portfolio. Today, First Eagle discusses gold’s role in detail and assesses the current drivers for performance.

Many investors buy gold instinctively, as a long-term store of value. Charlie Morris, Head of Multi-Asset at UK investment manager Atlantic House Fund Management, has devised a more conventional way of assessing gold – using a tried and tested model. 

The definitive market source for gold demand data, our latest Gold Demand Trends report explains in detail the 8% rise in global demand in Q2.

Listen back to our lively and informative discussion of the key trends shaping gold demand in the second quarter...