Despite year-on-year growth in the jewelry, technology, bar and coin, and central bank sectors, overall demand was down 7 percent year-on-year and 13 percent quarter-on-quarter to 831 tons in the third quarter of 2021.
Small outflows from ETFs, which are a proxy for institutional demand, generated a significant y-o-y decline, the World Gold Council said in its Q3 2021 «Gold Demand Trends» report published on Thursday, noting that outflows were concentrated in North America, while funds listed in other regions saw growth in holdings.
This contrasts with 18 percent y-o-y growth in the bar and coin sector, fuelled by a sharp y-o-y turnaround in Thailand and record year-to-date demand in the U.S. and Germany, as well as 33 percent higher jewellery demand y-o-y to 443 tons.
However, in Singapore, consumer demand fell by 18 percent y-o-y to 2 tonnes in the third quarter of 2021 – gold jewelry and bar and coin demand fell by 14 percent and 23 percent year-on-year respectively, amid muted economic sentiment that is affecting discretionary spending.
Inflation to Boost Demand
«When it comes to ETFs, the biggest issues are the softening of the gold price this year, which affects tactical positioning, as well as rising interest rates, which increases the opportunity cost of holding gold,» Andrew Naylor, World Gold Council regional CEO, told finews.asia.
Naylor said the ongoing global recovery is a trend he expects to continue, which bodes well for the precious metal. «You see discussions about rising prices of energy, commodities and retail goods worldwide, and inflation stories beginning to dominate, which have a longer-term impact.»
«It's currently an interest rate story and but it's increasingly looking like inflation is the is the future story and gold tends to perform well in inflationary environments, and that's when you'll see investment interest again,» Naylor said.
More Outreach
The World Gold Council has recently stepped up its engagement activity in the region with a slew of initiatives to be rolled out in the coming months. First, it will be holding its first investor summit in Asia on 9 November, a physical and online event where it will be talking to institutional investors about the future of finance and the key trends shaping asset management.
Naylor also said it is working on a professional development curriculum for the gold industry, which will be launched in the republic next year. «Hopefully we'll reinforce Singapore's position as a regional training center,» he said.
Finally, it is looking to launch its «Retail Gold Investment Principles,» in Singapore, designed to increase consumer trust in in the gold market.
