Gold Investment Demand Up as QE fears grow – ETF’s Rise 56% in Q3 – The World Gold Council

Today’s AM fix was USD 1,723.50, EUR 1,351.45, and GBP 1,087.66 per ounce. 
Yesterday’s AM fix was USD 1,724.50, EUR 1,353.08, and GBP 1,085.21 per ounce.

Silver is trading at $32.53/oz, €25.60/oz and £20.52/oz. Platinum is trading at $1,573.50/oz, palladium at $627.75/oz and rhodium at $1,100/oz.

Gold was relatively unchanged up $0.50 or 0.03% in New York yesterday and closed at $1,725.00. Silver fell to a low of $32.36 and recovered to $32.908, but slipped downward and finished with a gain of 0.65%.


XAU/USD Currency 1 Year – (Bloomberg)

Gold edged down on Thursday, but the looming US fiscal cliff, Eurozone debt problems and rising Middle East tensions continue to enhance the yellow metal’s safe haven appeal.

Yesterday, Israel launched its most ferocious assault on Gaza in four years after persistent Palestinian rocket fire, hitting at least 20 targets in aerial attacks and killing the top military commander of Hamas. The U.N. Security Council held a private(closed door) emergency meeting on Wednesday evening to discuss Israeli strikes against the Gaza Strip, since Israel threatened a wider offensive. Brent oil prices were holding above $109 per barrel. 

Minutes released from the US Fed’s October 24th meeting showed that “a number of participants indicated that additional asset purchases would likely be appropriate next year after the conclusion of the maturity-extension program.”

Today, the US Weekly jobless claims report is published at 1330 GMT.

The London Bullion Metal Association said that it expects gold bullion to reach $1,843/oz by September 2013, and forecast silver to reach $38.40.

The World Gold Council issued a report “Global gold demand reflects challenging global economic climate: ETFs up 56% and India up 9% in Q3 2012”  which showed that global gold demand fell 11% in the three months to September from record levels seen during the same period last year, which was curbed by a sluggish Chinese economy and stronger Indian demand limited the drop. 

In Q3 2012, gold investment demand (total bar and coin demand plus ETFs and similar products) was 429.9 tonnes down 16% from Q3 2011. Although the year-on-year snapshot for investment demand suggests falling interest, this is not the case. Rather, it highlights the strong demand seen in Q3 2011.

Interestingly, demand for ETFs rose 56% to 136t, compared to Q3 2011. Demand for gold-backed ETFs in Q3 grew significantly in the quarter partially due to institutions responding to the additional QE measures in the US and Europe.


XAU/EUR Currency 1 Year – (Bloomberg)

At 87 tonnes, Q3 2012 investment demand for gold surged from 78 tonnes in Q2, a rise of 12%. Examining this over the longer term, Q3 represents the first quarter-on-quarter increase in Indian investment demand since Q2 2011.

This ramp up in Indian demand has been driven, in part, by investors moving into the medals and imitation coin market, which was up 59% and the build-up to the wedding and festival season. The stabilization of the market, an increase in the retail outlet network and a gradual recovery of the rupee has helped cement this demand to result in India being the strongest performing market overall in the quarter.

In China, investment demand dropped between Q32011 and Q32012 and is down 8% year-on-year, due to dampened sentiment in response to the on-going regional economic slowdown. Compared to Q3 2011, investment demand in China is down 16%; however, current demand does remain well above the longer term average wrote The World Gold Council.

Despite the impact of wider economic events, Chinese consumer sentiment towards gold has not waned and it expects demand for gold in the country will increase.

Jewellery
In Q3 2012, jewellery demand increased was down 2% from Q3 2011figures to 448.8 tonnes. The ongoing slow down in China – the second largest jewellery market – has impacted global demand in the sector across 2012 to date.

Jewellery demand in China fell by 6% to 123.8tonnes in Q3 2012 due to the ongoing economic growth slowdown and the resulting dampened sentiment. Despite this, however, as consumers adjust to the change in Chinese trajectory we expect that demand will notably increase.

Indian consumers resumed purchasing gold jewellery as gold prices stabilised prior to the key wedding and festival seasons. Demand for gold jewellery increased 7% to 136.1 tonnes in Q3 2012 as the rupee recovered and consumers adapted to pricing levels.

Technology
During Q3 2012, gold demand in the technology sector fell by 6% year-on-year to 108.0 tonnes, equivalent to a value of $5.8 billion.

Not all areas of the technology field suffered from declines during the quarter, however, with the use of gold in electronics continuing the incremental growth seen in 2012 so far. Use of gold in electric goods such as tablets, mobile phones, fuel cells and medical diagnostic equipment increased, helping to sustain overall demand figures. We expect this trend to continue, as evidenced by the increasing number of new technology patents involving gold components.

Stephen Flood, GoldCore CEO commented "The World Gold Council’s Quarterly Gold Demand Trends report provides interesting reading. Global Investor demand for gold has not at all wilted; investors still feel that inflation pressures are significantly to the upside. Quantitative Easing or Money Printing may afford short term relief to contracting economies but in the long run, and throughout history, it leads to massive economic dislocations. Gold remains the ultimate safe haven asset for investors who seek a reprieve from these uncertain times.”

For breaking news and commentary on financial markets and gold, follow us on Twitter.         


Cross Currency Table – (Bloomberg)

NEWS
Gold Demand Down, World Gold Council Says – Nasdaq

India gold demand reverses trend, rises 9% in Q3: WGC
– Money Control

Hong Kong Gold and Silver Exchange seeks warehouse in China – Reuters

New silver trading platform to lift HK’s hub – China Daily

Gold retreats but remains near key level – Market Watch

Gold slips as oil pares gains;eyes on Middle East – Reuters

Gold ends higher, back above $1,730 an ounce – Market Watch

COMMENTARY
Video: Gold Demand Trends Q3, 2012 – The World Gold Council

Video: Gold Loses its Shine as Demand Falls – Bloomberg

A Change is Coming – Gold 2013 & Onwards – 24H Gold

Gold and the Cold War – GoldSeek

Mark OByrne

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