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Gold demand down in Q2 as slide continues

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Gold Demand Trends from World Gold Council came out for Q2 2015 today, highlighting the lowest quarterly demand for gold since 2009. (Link to the full downloadable report here)

Recently we have seen the gold price battered as a strong US dollar has been driven by positive economic data and the likelihood of interest rates hikes ahead, signalling a healthy economy.

The 12 % drop in demand was mainly due to bad weather conditions (resulting in less disposable income in rural areas of India) and a lack of auspicious marriage dates in India. It should be noted that the number of marriages per year doesn’t change, they will merely take place later in the year, meaning the rest of the year will likely see strong demand from this important group.

China recently devalued their currency by 2 %, the largest one-day decline in 20 years because of the 2 % cap set by the People’s Bank of China (PBoC). Further PBoC announced they have added 604 tonnes to their reserves since 2009, bringing the total reserve to 1658 tonnes in June 2015. This confirms China’s continued move away from the US dollar.

European ETF demand turned positive for the first time since 2012 as the Greek debt crisis soured this summer. Bar and coin demand was steady and the European investment demand continues to rise. 

Holding on to the $1100 support with the help of the Chinese yuan's devaluation, gold looks good for a rebound to around $1175 in the shorter term (3-5 weeks).


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