Global gold demand hits 3-year high in H1

Global gold demand jumped to a three-year high of 2,181.7 tons in the first half of this year, largely due to record-breaking central bank purchases, World Gold Council reported Thursday.

Council's figures revealed that central bank buying in the January-June period totaled 374.1 tons, marking the largest net first half increase in global gold reserves in the council's 19-year quarterly data series.

"Central bank buying and healthy ETF [exchange-traded fund] inflows were the driving forces behind gold demand throughout the first half of 2019," it said.

The report showed that gold supply reached 2,323.9 tons – the highest since 2016.

"Solid growth in both mine production and recycling fed into a 2% increase in total first half gold supply," it said.

The council also noted that gold bar and coin investment in the same period amounted to a ten-year low of 476.9 tons.

"Shifts in bar and coin investment were very much price-related: as the gold price powered its way to multi-year highs, profit-taking kicked in and retail investment all but dried up," it said.

The council said that the gold price broke through $1,400 per ounce for the first time since 2013.

"Among the factors driving this rally were expectations of lower interest rates and political uncertainty, with further support coming from strong central bank buying," it said.

On the jewelry side, the council said growth in the first half demand was largely the product of a more positive environment for Indian consumers.

"A busy wedding season and healthy festival sales boosted demand, before the June price rise brought it to a virtual standstill," it said.

The council added that the technology sector reduced its usage of gold due to challenging global conditions, although the outlook is for this element of demand to establish something of a floor over coming quarters.