OTC gold investment offsets drop in China jewelry, Germany bar and coin...

 

UNREPORTED gold buying has again saved the global gold market from a heavy surplus of supply over demand according to new data today, driving prices to fresh record highs even as central banks slow their purchases as a group.

 

Figures released by the mining industry's World Gold Council say that across the past 12 months, visible gold demand – net of scrap supply and recycling flows – matched only 68.5% of new mine output.

 

The gap between demand and supply was again closed by undisclosed central-bank gold buying on the WGC estimates, plus 'over-the-counter' and other unreported demand among private-sector investors.

 

 

"Global gold ETF inflows were a major driver of growth" between July and September says the new Gold Demand Trends data and analysis from the WGC, with investment through those highly visible stock-market traded products flipping positive for the first time since Q1 2022.

 

But running much larger than ETFs or central-bank demand, 'OTC and other' unreported purchases "almost doubled" in the third quarter of 2024 from the same period last year says the Council's new report, pointing to wholesale and kilo-bar transactions struck with large bullion banks, dealers and brokers rather than via exchange-traded contracts or retail purchases of smaller, higher-cost bars or coin.

 

That marked "the seventh consecutive quarter in which OTC investment has been positive" – a number which "captures demand in the OTC market (for which data is not readily available)," according to the WGC's own definition, plus "changes to inventories on commodity exchanges, any unobserved changes in fabrication inventories, and any statistical residual.

 

"It is the difference between total supply and gold demand," concludes the World Gold Council's note – and supply from gold mining is seeing "a big push from producers for a record year" as the market price of gold bullion runs to new all-time highs.

 

Household and industrial demand, in contrast, has fallen so far in 2024, plunging in No.1 consumer China as jewelry demand falls 27.5% year-to-date and offsetting a rise in No.2 India with weakness in other countries – such as Germany, where retail bar and coin demand continues to collapse.

 

All told, that has led to an overall drop of 11.1% in fabricated product demand by weight in the first 9 months of 2024 on today's WGC figures, compiled from fieldwork, analysis and intelligence gathered by specialist analysts Metals Focus.

 

Central banks as a group meanwhile halved their net demand in July-to-September on Metals Focus' estimates for the WGC compared to Q3 last year, dropping to the lowest quarterly buying since spring 2023. But while official gold holdings data from the International Monetary Fund aren't yet available for July-to-September, the WGC numbers outstripped those reported figures by 110% over the prior 5-year period.

 

Over that same half-decade, 'OTC and other' has now accounted for 1 ounce in every 5 of private-sector net gold demand on the WGC's Gold Demand Trends data, twice the proportion of the previous 20 calendar quarters.