Posted at 9:31 AM , on August 2, 2020
The latest half-year report of the World Gold Council (WGC) has brought out some interesting trends in gold demand across the world. The overall demand for gold is down 6% at 2076 tons in the first half of 2020. That is not a surprise considering that gold prices are at an all-time high. Gold in the international spot market scaled $1950/oz, breaching the previous peak of 2011. So the 6% fall in gold demand is fine. But, what is really surprising is how the components of demand for gold have shifted.
Sharp fall in jewelry demand
Over the last 20 years, the average gold consumption for jewelry purposes has been over 1000 tons in the first half. That has fallen drastically to 572 tons in the first half of 2020. It is not just about the price of gold. Back in 2011, when the price of gold was above $1900/oz, the jewelry demand had been closer to 900 tons. The difference in 2020 is that the high gold prices have also been accompanied by a growth slowdown due to the Coronavirus pandemic. Unlike the slowdown of 2008, this time around the economic weakness has manifested in the form of economies like the US contracting by 33% in the Jun-20 quarter. In addition, the lockdown has resulted in the loss of jobs, a sharp reduction in income levels, and also a tremendous loss of purchasing power. This has deeply impacted consumption. Major markets like India have seen compression in jewelry supply and also demand.
Posted at 2:29 PM , on January 16, 2017
Gold had a virtual rollercoaster ride in 2016. From the lows of January 2016, gold rallied nearly 30% before giving up a chunk of the gains in the light of Trump’s aggressive growth pitch. Economic growth and gold prices rarely go hand in hand. Gold is a parasitic asset class that typically thrives when there are question marks over other asset classes. So what does gold hold for the year 2017? Continue reading
Posted at 6:25 PM , on January 13, 2016
Will 2016 see a revival in the price of gold?
It is after a very long time that the price of gold has seen a consistent rise for 9 successive trading sessions. After touching a low of $1050/oz and threatening to fall below the $1000 mark, gold registered smart gains to cross and settle above the $1100 mark. Is this a sustainable rally in gold prices, or is it just another false rally like the many cases we saw post 2011? Continue reading
Posted at 7:05 PM , on August 10, 2015
A contrarian take; on why the worst may be over…
Frankly, it is hard to see a bullish report on gold in the global scenario. Let us look at gold prices in dollar terms. Between August 2011 and August 2015, the dollar price of gold has fallen from $1900 / troy oz to below $1100 / troy oz. As if this 45% fall was not enough, most market analysts are predicting that gold will go below the psychological level of $1000 / troy oz. While it is hard to comment on levels, there is a strong possibility that gold may begin the process of bottoming out. Let us bust a few myths about gold. Continue reading
Posted at 7:59 PM , on July 30, 2015
by- Sugandha Sachdeva | AVP & Incharge- Metals, Energy & Currency Research at Religare Securities Limited
With gold prices slipping to new five year lows, the sentiments have once again turned quite bearish. After respecting the psychological level of Rs.25000/10gms at domestic bourses for a long time, prices have eventually breached the same, reflecting the lack of demand for the precious metal and unwinding of safe haven bets. In international markets too, the prices have plunged sharply and are trading below $1100 per ounce, significantly down from the all-time highs of $1920 per ounce. The universal safe haven asset has also failed to attract investors during the recent turmoil emerging out of Greece debt talks and the jitters in Chinese equity markets. So does that infer that prices may head further lower since the investors look in no hurry to take advantage of the lower prices? Well, the fundamentals are indicating something that’s not divergent from this thought ! Continue reading