Q3 gold demand down 7% to 831t

ETF outflows outweighed continued recovery in other sectors 

Gold demand (excluding OTC) fell 7% y-o-y to 831t in Q3. This drop was almost exclusively driven by ETFs – which swung from very large inflows in Q3 2020 to modest outflows this year – overshadowing strength in other sectors of demand during the quarter. Jewellery, technology and bar and coin were significantly higher than in 2020. Modest central bank purchases were a solid improvement on the small net sale from Q3’20. Supply was down 3% y-o-y due to a significant drop in recycling.

Jewellery continued to draw strength from the ongoing global economic recovery: Q3 demand rebounded 33% y-o-y to 443t. 

Bar and coin investment increased 18% y-o-y to 262t. The sharp August gold price dip was used by many as a buying opportunity.

Small outflows from global gold ETFs (-27t) had a disproportionate impact on the y-o-y change in gold demand, given the hefty Q3’20 inflows of 274t.  

Central banks continued to buy gold, albeit at a slower pace than in recent quarters. Global reserves grew by 69t in Q3, and almost 400 y-t-d.

Technology gold demand grew 9% y-o-y, driven by continued recovery in electronics. Demand of 84t is back in line with pre-pandemic quarterly averages.

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ETF outflows outweighed continued strong recovery in other sectors of demand.
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At 443t, however, demand remained below pre-COVID levels.
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The modest outflows were in sharp contrast to sizable Q3’20 inflows.
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ETFs switched to minor outflows, negating strong recovery in other sectors of gold demand

ETFs switched to minor outflows, negating strong recovery in other sectors of gold demand

Q3 demand by sector, tonnes*

ETFs switched to minor outflows, negating strong recovery in other sectors of gold demand
Q3 demand by sector, tonnes*
*Data to 30 September 2021. Source: Metals Focus, World Gold Council

Sources: Metals Focus, World Gold Council; Disclaimer

*Data to 30 September 2021.

Highlights

The gold price averaged US$1,789.5/oz in Q3, marginally lower than the Q2 average. The y-o-y comparison shows a 6% fall, reflecting the August 2020 record high US dollar price. Gold’s performance is consistent with its demand and supply dynamics and a macro environment of higher interest rates and risk-on investor appetite. 

Year-to-date, gold demand is 9% lower. A doubling of central bank buying and 50% growth in jewellery demand over the first three quarters only partly offset the decline in ETF demand. Y-t-d demand remains notably weaker when compared with the same pre-pandemic period of 2019.

Gold supply is flat y-t-d. Mine production has steadily increased throughout 2021 and the y-t-d total is up 5%, but recycling has slowed down significantly, contracting by more than 12% over the same period.  

Our full-year 2021 outlook shows a picture similar to the year so far. Ongoing economic recovery will benefit jewellery and technology; investment should draw support from continued inflation fears but relatively modest ETF flows compare negatively with 2020’s record inflows. Central banks are poised for an above-average year of net purchases.

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