According to data released by the World Gold Council, a market development body, total gold demand in the first half of the year is at 2 335 tonnes. This figure is 16% higher than the previous record set in the first half of 2009.
The company’s Gold Demant Trends report noted that a substantial proportion of that total figure has been investment demand, which reached 448 tonnes ,up 141% from the 186 tonnes it made in the same period last year.
The second quarter for 2016 has continued in the same vein as the first quarter this year with overall gold demand growing to 1 050 tonnes, up 15% from the second quarter’s 2015 figure of 910 tonnes. The boost came by considerable and consistent investment demand. After Britain’s vote to leave the European Union left a large dent in business confidence, as well as the market anxiety brought on by the US elections, investment demand reached 448 tonnes as investors sought risk diversification and a safe store of value in the face of continued political, economic and social instability.
A cause and effect of the growth in investment demand was a 25% rise in the US$ gold price, the strongest H1 price gain since 1980.
Alistair Hewitt, Head of Market Intelligence, World Gold Council, commented: “The strength of this quarter’s demand means that the first half of 2016 has been the second highest for gold on record, weighing in at 2 335 tonnes. The global picture for gold is dominated by considerable and continued investment demand driven by the West as investors rebalance their investments in response to the ever-expanding pool of negative yielding government bonds and heightened political and economic uncertainty.”
Second quarters 2016 report saw a total supply of gold at an increase of 10% to 1 145 tonnes compared to 1 042 tonnes in the second quarter of 2015. The primary driver of this increase was recycling, which saw a significant rise of 23%, as consumers capitalised on the rising gold price, leading to first half recycled gold supply of 687 tonnes, 10% higher than the 626 tonnes seen in H1 2015.
With regards to South Africa, Warren Beech, Partner and Head of Mining, Hogan Lovells said, “Platinum and Manganese was pretty good 6 weeks ago and is now picking up again. The difference with these and gold is that gold is sustainable, and most of the gold projects are doing well in South Africa. The municipal elections didn’t really put a dent in the industry; if anything the elections resulted in a robust debate, which added a positive spin to the industry. These positive sentiments are also lead by Sibanye Gold. Though gold in South Africa has been doing well, the question really is how long will it last. “