The latest quarterly World Gold Council data is out, and it reveals that ¨total global gold demand increased 4% year-on-year to 1,258t, marking the strongest Q2 in our data series.¨
Which isn’t entirely surprising given what’s going on in the world.
The US election cycle has already seen an assassination attempt of Donald Trump. Ukraine just launched a strike into Russia. And we’re on the verge of further military escalation in the Middle East.
Of course add in that the futures markets are now overwhelmingly pricing in 1-2 rate cuts by the Federal Reserve’s September meeting, and the strong demand for gold makes a lot of sense.
We also mentioned recently how while so far most of the demand has come from the east, that the looming interest rate cuts served as one of the most likely triggers to finally get western investors back into the market.
And sure enough, global gold ETFs just experienced their strongest month since April 2022 as they added $3.7 billion of inflows in July. The 3rd consecutive month of additions.
The central banks also just set a new record for the amount of gold purchased in the first half of a year, as they added 483 tons in the first half of 2024. Which breaks last year’s record of 460 tons. China, Turkey, India, and Poland were again some of the largest buyers.
Remember that this is all occurring ahead of the BRICS meeting this October, with reports of progress towards a ‘Unit’ currency that could involve a gold backing continuing to emerge.
As a result, the gold price is back over $2,500 per ounce, and that’s before the next round of central bank easing has even begun.
Source: Miles Franklin