Significant rise in gold demand among private investors and central banks

While in the second quarter of 2018 global demand for gold decreased slightly by 4 per cent year-on-year, the recently published "Gold Demand Trends" by the World Gold Council report a steadying in the third quarter, with a small increase of 6.2 tonnes. As in the first half-year, gold demand in the third quarter of 2018 proved extremely heterogeneous, both by asset class and region.

Private and institutional gold demand actually did not move in opposite directions, despite appearances

Gold ETFs and ETCs had continued to experience strong outflows in Q3 2018, with the lion's share in the US. However, a clear trend reversal seems to be slowly emerging across the rest of the world. Not only did individual issuers such as Xetra-Gold report inflows in Q3, but the asset class as a whole has been developing favourably since October. Private demand for gold coins and bars was widely positive in the third quarter, with a 28 per cent hike year-on-year. Demand for gold jewellery also increased by 6 per cent over the same period. One reason was the favourable gold price development due to the strong US dollar.

Central banks record largest gold purchases since 2015

While central banks had already increased their demand for gold by 8 per cent year-on-year in the second half of the year, they stepped up their gold reserves even further in Q3 2018. The significant rise of 22 per cent year-on-year represents the highest quarterly growth since Q4 2015. While the central banks of Russia, Turkey and Kazakhstan again accounted for the lion's share of purchases, they were joined by an increasing number of like-minded central banks in other regions.