The World Council published its report on “gold demand trends for full year 2016” last Friday, Feb. 3.
Gold demand increased by 2% from the prior year and achieved a level of 4,903 tons. The gold demand in 2016 was the highest over the last three years.
Gold demand benefited by a surprising inflow of 531.9 tons into ETFs. This was the second record after that one of 2009 when inflows for 646 tons were marked into exchange-traded funds.
The growth in the demand for gold in 2016 was counterbalanced by decreases in the consumer demand for jewels, the lowest over a seven-year period, and in the purchases of gold by the central banks, a 33% decline on a year-over-year basis. The latter was the lowest over the last seven years.
The World Gold Council says with its report that “China’s softening economy and India’s changing policy framework both contributed” to the decline in the demand for jewels while the decline in the central banks’ purchases was “due in part to increased pressure on FX reserves.”
Concerning the demand for coins and bars, 1,029.2t in 2016, with its strong fourth quarter, China helped it stay stable. Otherwise the demand for coins and bars would have been lower. The last time Chinese retail investors were so eager to buy bars and coins was during the second quarter of 2013.
Source: Metals Focus; World Gold Council
Concerning its price, gold for immediate delivery increased by almost 8% from 2015 when it averaged $1,159.942 per troy ounce, to 2016 when it averaged $1,250.321 per troy ounce on the London Bullion Market.
“Following Trump’s conciliatory acceptance speech and the FOMC’s interest rate rise,” said the World Gold Council, gold lost approximately 8.5% during the last quarter of 2016 partially offsetting what it gained, approximately 25%, until Sept. 30, 2016.
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