Consumer and Industrial Demand For Gold

Written by Ian Davis – Bullion Manager • Last updated 10 Jan 2019

There appears to be no end in sight to the consumer demand for gold and with the world's reserves of gold lower than ever many predict the price will remain high for time to come.

goldandsilver960Sometimes we can hardly keep up with order for our popular products! 

December 2018 was a bullish month for gold backed exchange-traded funds (ETF's) which saw inflows of roughly $2.5bn equivalent to 2.4m ounces or 76 tonnes of physical gold. This continues in early 2019 with investors making a switch from underperforming equities to the backdrop of Brexit, a sluggish US economy and a slowdown in Asian markets led by the Chinese. 

As of Q3 2018 the World Gold Council reported a 28% rise in gold coin and bar demand. With currencies weaker across the globe and tumbling stock markets investors are moving to gold as a safe haven. They also reported a 6% rise in jewellery demand something we can relate to especially in the run up to Christmas! There has been more demand in physical gold than gold ETF's which showed a sharp decline which has offset overall demand. The final boost to demand came from central banks buying up gold resulting in overall demand of 964.3 tonnes, 6.2 tonnes more than last year. 

Global demand has increased with China leading the charge as the largest gold market. Since the establishment of the Shanghai Gold Exchange in 2002 China's gold market has grown even with a fairly narrow investor base and "infant" infrastructure. As policy and regulatory changes in coming years open up domestic investment as well as international, we expect China to continue to reign supreme. 

In 2015 the World Gold Council commented on the highest demand ever recorded as many took steps to preserve their wealth moving away from other traditional investments. China, India, and Russia are active in the worldwide gold rush and China sees the highest recorded private gold ownership. Europe is also active with France, Germany, and Switzerland reporting record increases with Germany topping the list with the highest gold ownership. 

You may wish to view all of our articles on our gold guide