Dollar demand for gold soared to an all-time quarterly record of $32bn in the third quarter of 2008 according to the latest statistics from the World Gold Council. The trade body says:
This figure was 45% higher than the previous record in Q2 2008.Tonnage demand was also 18% higher than a year earlier.
And yet, the gold price is still doing this:
According to the council, much of the investment demand came through exchange traded funds, bars and coins.
Retail demand, meanwhile, rose 121 per cent to 232 tonnes in the quarter. There were also widespread reports of gold shortages among bullion dealers across the globe.
Gold ETFs enjoyed a record quarterly inflow of 150 tonnes in Q3, boosted by extreme levels of economic and financial uncertainty. The peak in inflows occurred in late September, triggered by the collapse of Lehman Brothers and a fear of banking sector failures. Net inflows surged by an unprecedented 111 tonnes during 5 consecutive trading days, equivalent to US$7bn.
Q3 saw a record US$18bn of consumer demand for gold jewellery with buyers returning to the market on lower price points, around and below US$800, demonstrating the underlying positive sentiment towards gold and its recognition as a store of value. The biggest contributor to the positive trend was India which witnessed a rise of 65% in US$ value or 40 tonnes relative to previous year levels, with the Middle East, Indonesia and China all enjoying rises of more than 40% in value or 10% in tonnage. There were however, strong declines in Western markets with the US down 9% in value and 29% in tonnes, and the UK down 5% in value and 26% in tonnes due to the overall decline in the retail market.
Of course recent dollar strength does have a lot to do with gold’s dour performance. In its latest commodity focus Standard Chartered also suggests liquidation by commodity index investors could also have something to do with it.
The current outlook from them:
We are expecting prices to move in a broad sideways trend over the next few months before resuming its uptrend in 2009 as the USD weakens once more.
Related links:
Gold at $53,000 an ounce? – FT Alphaville
Short view: Gold’s dimmed glow – FT.com
______