Gold ETF Demand Holds Steady
August 20th at 6:00am by Tom Lydon
Demand for gold ETFs was steady in the second quarter as prices for the precious metal were also little changed, according to a report from the World Gold Council.
Gold exchange traded funds were stuck in sideways trading through the second quarter with gold prices locked around $1,600 per ounce as demand on the lower prices offset sellers who were doubtful of a new price trend.
“Gold’s performance reflects the continuing challenging economic climate,” Marcus Grubb, Managing Director, Investment at the World Gold Council, said. “A softness in India and China, who between them represent over 45% of the total second quarter jewellery, and investment demand accounts for much of the slowing of global gold demand.”
Nevertheless, gold remains a vehicle for capital preservation and source of liquidity.
“This is evident from the activity of central banks, the ultimate long term investors, which continue to increase their gold holdings to diversify reserves and protect against reliance on one or more foreign currencies,” Grubb added.
Overall gold demand was down 7% in the second quarter compared to the same quarter last year and 10% lower compared to the first quarter, according to a World Gold Council research note.
“Demand for ETFs and similar products in Q2 was broadly flat year-on-year, as new demand was marginally outweighed by selling,” according to the note.
There was a fair share of profit-taking investors and bargain hunters during the directionless price action in gold over the second quarter. [Gold ETFs Pare Weekly Loss After Jobs Report]
Gold demand for ETFs and similar products dropped by 0.8 tonnes over the second quarter after rising 53.2 tonnes in the first quarter. In comparison, demand for jewelry rose 418.3 tones and physical bar demand increased by 226.2 tonnes over the second quarter. [ETF Chart of the Day: Gold]
Gold demand from ETFs and similar products peaked in the fourth quarter of 2011 at 104.4 tonnes.
Investors may gain access to gold through ETF products, such as:
- SPDR Gold Shares (NYSEArca: GLD)
- iShares Gold Trust (NYSEArca: IAU)
- ETFS Physical Swiss Gold Shares ETF (NYSEArca: SGOL)
For more information on gold, visit our gold category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own GLD.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.