WGC - Gold Demand Trends Q2 2021
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Posted 02/08/2021
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The World Gold Council just released their latest quarterly Gold Demand Trends for Q2 2021 which saw a continuation of rampant bar and coin investment demand and a return to inflows into ETF’s. The quarter saw 955 tonne of gold consumed. As usual, we summarise across all uses and look at supply too.
Bar & Coin Investment Demand
Bar and coin investment saw a fourth consecutive quarter of strong year-on-year gains with Q2 demand of 243.8 tonne resulting in a H1 total of 594.t, the strongest half year since 2013. Of that 244 tonne, China accounted for nearly a quarter at 57.3 tonne.
![Chart, bar chartDescription automatically generated Chart, bar chartDescription automatically generated](/root/NewsArchive/Images/2021/8/1-20bar-20coin.webp)
ETF Investment Demand
Modest Q2 inflows into gold-backed ETFs of 40.7 tonne only partly offset the heavy outflows from Q1; consequently, ETFs saw H1 net outflows (of 129.3t) for the first time since 2014.
![](/root/NewsArchive/Images/2021/8/2-20etf.webp)
ETF outflows slowed sharply in April, before reversing in May and resulting in the net inflows of 40.7t for the second quarter. These inflows were less than 10% of the huge 427.5t inflows we saw in Q2 2020 and help explain the sharp y-o-y drop in overall investment. The net result for H1 was for outflows of 129.3t, in comparison with record H1 2020 inflows of 731.2t.
![](/root/NewsArchive/Images/2021/8/3-20invest.webp)
Central Bank Demand
In a third consecutive quarter of net central bank buying, global gold reserves grew by 199.9t in Q2, the highest level of quarterly net purchases since Q2 2019 (227.8t) and 73% above the five-year quarterly average. This brings net buying for H1 to 333.2t, 63% higher than H1 2020, 39% higher than the five-year H1 average, and 29% above the ten-year H1 average.
Having been relatively subdued in the second half of 2020, demand picked up in the first half of 2021, with almost two-thirds concentrated in Q2. Reported gross purchases by the IMF totalled 287.7t over the first six months, with nine central banks accounting for the vast majority of this
![](/root/NewsArchive/Images/2021/8/4-20cb.webp)
Jewellery Demand
Q2 jewellery demand (390.7t) continued to rebound from 2020’s COVID-hit weakness, although remained well below typical pre-pandemic levels, partly due to weaker Indian demand growth. Demand for H1, at 873.7t, was 17% below the 2015-2019 average.
![](/root/NewsArchive/Images/2021/8/5-20jewellery.webp)
Technology Demand
Gold used in technology continued to recover from the 2020 lows with Q2 demand 18% higher y-o-y at 80t – in line with average Q2 demand from 2015-2019 of 81.8t. H1 demand (161t) was fractionally above that of H1 2019 (160.6t). Electronics rose 16%, memory 3%, LED 15%, wireless 7% and printed circuit boards 8%.
![](/root/NewsArchive/Images/2021/8/6-20tech.webp)
Supply
Gold supply bounced back in H1, up 4% y-o-y to 2,308t as the mining industry experienced much fewer pandemic production stoppages and some underlying production growth was recorded. Mine production increased 9% y-o-y in the first six months of the year. Recycled gold supply fell by 5% y-o-y in H1, despite a higher average gold price – up about 10% y-o-y – as the economic recovery reduced the incentive to recycle gold.