Gold 4Q19: To stay strong


However, price growth is expected to decelerate
Chief Investment Office04 Nov 2019
Photo credit: AFP Photo


Strongest quarterly performance and highest price since 2Q13. Gold prices surged 14% in July and 25% in August 2019, making 3Q19 the strongest performing quarter. It registered 11% growth based on average price and also posted its highest quarterly average price of USD1,470 per ounce since 2Q13. This was mainly fuelled by the Fed’s rate cut in July and the anticipation of further cuts, amid sideways movement of the US dollar.

Substantial buying by central banks and ETFs. In line with our expectation of a 10% growth in demand from central banks in 2019, we saw purchases amounting to 224.4 tonnes of gold in 2Q19 and 374 tonnes in 1H19 – the largest net buying on record over the past 19 years. On the back of fund inflows, gold-backed ETFs added 67.2 tonnes to a six-year high of 2,548 tonnes.

These two sources of buying offset the 12% y/y drop in demand for gold bars and coins, led by a 29% decline in demand from China. Meanwhile, jewellery demand edged up 2% y/y, aided by a 12% growth from India despite a 4% drop from China.



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