WGC Q2 Report For 2016

For the first time, investment demand has been the largest portion of total gold demand for two consecutive quarters according to the World Gold Council’s Q2 report for 2016. Additionally, gold demand for H1 at 2,335t is the second largest now on record (and the strongest H1 performance for more than 35 years at 25%) following Q2’s 15% growth. 

As pictured below, Q2 saw huge ETF inflows, continuing the trend from the previous quarter. Interestingly, jewellery demand faltered in accordance with the rise in gold prices as measured in multiple key currencies also pictured below. Record H1 investment demand of 1,063.9t was 16% higher than the previous H1 high in 2009. 

The total supply increased from 1,041.7t in Q2 2015 to 1,144.6t, a year-on-year increase of 10%. First half supply is just 1% higher year-on-year, constituting the slowest rate of H1 growth in 8 years. One of the main factors involved in this growth has been recycling which, along with hedging, is supported by higher gold prices. An indication of this is provided below with a plot of recycled tonnes vs the LBMA USD price.