China & Central Banks Continue To Buy Huge Amounts Of Gold As ETF Selling Slows
Once again, the culprit was a huge outflow from gold exchange-traded funds. ETFs sold off 119 metric tons of their holdings, compared with the third quarter of 2012, when such ETFs purchased 138 metric tons. Still, that’s an improvement from the second quarter of this year, when ETFs liquidated a whopping 402 metric tons.
On the positive side, physical investment demand (bars and coins) and jewelry continued to show growth. The combination of the two—what the WGC calls “consumer demand”—were up by 42 metric tons from a year ago, evenly split between jewelry and investment.
However, that’s a far cry from the 377 metric ton rise in the second quarter, when consumers in Asia were lining up to buy.
Indeed, India’s demand was down 32 percent in the quarter, though the country’s demand was still up 19 percent through September, which indicates just how strong demand was in the first half of the year.
China’s demand, on the other hand, continued to boom, and was up 18 percent in the quarter and 40 percent through September. In an interview with HardAssetsInvestor this week, Marcus Grubb, managing director of investment for the WGC, said that China’s demand will likely exceed 1000 metric tons this year, making it’s the world’s largest gold market for the first time.
Another bright spot in the report was central bank purchases, which totaled 93 metric tons. Though that was down from the 112 metric tons from a year ago, it’s a very robust figure and exceeds the 71 metric tons of buying in the second quarter, indicating that central banks were not dissuaded from buying despite the plunge in gold prices.