Gold markets have rallied significantly during the course of the week but have also given back quite a bit of the gains. That being said, the market still looks
Gold markets have rallied signicantly during the course of the week but have also pulled back from a major downtrend line. That being said, the market is likely to continue to see lots of choppy behavior, and as a result I anticipate that we will continue to see volatile trading. Quite frankly, this is a market that I think it is easier to trade on the short-term charts, although if we break above the highs of the last couple of weeks, it is very likely that the gold market will go racing towards the $1835 level. That being said, it is going to take a significant amount of momentum to make that happen.
Gold continues to suffer at the hands of higher interest rates in the United States, because quite frankly it is cheaper to carry paper than it is massive amounts of metal, as the storage fees have a major inuence on what happens next. Despite the fact that you have always heard that gold is a hedge on insuation, that is only of bond yields are not rising at the same time.
Gold demand (excluding OTC) fell 7% y-o-y to 831t in Q3. This drop was almost exclusively driven by ETFs – which swung from very large inows in Q3 2020 to modest outows this year – overshadowing strength in other sectors of demand during the quarter. Jewellery, technology and bar and coin were signicantly higher than in 2020. Modest central bank purchases were a solid improvement on the small net sale from Q3'20. Supply was down 3% y-o-y due to a signicant drop in recycling.
Jewellery continued to draw strength from the ongoing global economic recovery: Q3 demand rebounded 33% y-o-y to 443t.
Bar and coin investment increased 18% y-o-y to 262t. The sharp August gold price dip was used by many as a buying opportunity.
Small outows from global gold ETFs (-27t) had a disproportionate impact on the y-o-y change in gold demand, given the hefty Q3'20 inows of 274t.
Central banks continued to buy gold, albeit at a slower pace than in recent quarters. Global reserves grew by 69t in Q3, and almost 400 y-t-d.Technology gold demand grew 9% y-o-y, driven by continued recovery in electronics. Demand of 84t is back in line with pre-pandemic quarterly averages.