Gold hits record high:sprint-or-marathon?

With Q2 gold demand down 11% y-o-y to 1,015.7t, demand for the first half year was 6% weaker at 2,076t. The COVID-19 pandemic was again the main influence on the gold market in Q2, severely curtailing consumer demand while providing support for investment. The global response to the pandemic by central banks and governments, in the form of rate cuts and massive liquidity injections, fuelled record flows of 734t into gold-backed ETFs (gold ETFs). These flows helped lift the gold price, which gained 17% in US dollar terms over the first half, hitting record highs in many other currencies.

Total bar and coin investment weakened sharply in Q2, leading to a 17% y-o-y decline in H1 demand to 396.7t. This sector of investment saw a clear East/West divergence in investor behaviour, with most markets across Asia and the Middle East seeing a slowdown in investment, while Western investors increased demand.

Central bank buying slowed again in Q2, although the comparison is with a record Q2 2019. The sector added a net 233t of gold in H1. The supply of gold was also impacted by the pandemic, falling 6% to 2,192t as both mine production and recycling were affected by lockdown restrictions.