Where’s Global Gold Demand Coming From?

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Growing demand for physical gold bullion and jewelry, along with rising industry consumption, have helped support the gold market this year.

For instance, bar and coin investment rebounded from the low levels last year, with second quarter demand rising 13% to 241 metric tons from Q2 2016 and first half demand increased 11% to 532 metric tons. The World Gold Council pointed to India and Turkey contributing to the increased demand for physical gold.

India also contributed to the rise in jewelry demand, which strengthened from a weak 481 metric tons in 2016 and gained 8% in Q2.

Additionally, the technology sector demand experienced its third consecutive quarter of growth, up 2% to 81 metric tons, on the increased adoption of wireless charging and development features using LEDs.

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While the World Gold Council does not predict the price of gold, Artigas said WGC believes that there are various factors that may prove supportive of gold demand.

“On the consumer side, we expect to see better Indian demand and Chinese demand seems to be at least as robust as it was last year,” he said. “In terms of investment demand, tailwinds have included: a weakening US dollar; lower probability that the Fed will continue to increase interest rates this year, as implied by bond markets; and higher geopolitical and market uncertainty despite a low volatility environment.”

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