Central banks all over the world bought 224.4 tonnes of gold in the second quarter of 2019, which brought the first half of 2019 to 374.1 tonnes, representing the largest net H1 increase in global gold reserves in three years. According to the World Gold Council's (WGC) recent report “Gold Demand Trends Q2 2019”, buying was again spread across a diverse range of countries, especially in emerging markets. “Holdings of gold-backed ETFs grew 67.2 tonnes in the second quarter to a six-year high of 2,548 tonnes. The main factors driving inflows into the sector were continued geopolitical instability, expectation of lower interest rates, and the rallying gold price in June,” reads the report. It said that strong recovery in India's jewellery market pushed demand in Q2 up by 12 percent to reach 168.8 tonnes. In addition, a busy wedding season and healthy festival sales boosted demand, before the June price rise brought it to a virtual standstill. Indian demand drove global jewellery demand 2 percent higher YoY to 531.7 tonnes. On the other hand, bar and coin investment in the second quarter fell by 12 percent to record 218.6 tonnes, according to the report. “Combined with the soft first quarter of 2019 number, the first half total ended at a 10-year low of 476.9 tonnes. At the same time, a 29 percent YoY drop in China accounted for much of the global second quarter decline,” reads the report. It added that gold supply grew by 6 percent in the second quarter, recording 1,186.7 tonnes. “A record 882.6 tonnes for the second quarter gold mine production and a 9 percent jump in recycling to 314.6 tonnes boosted by the sharp June gold price rally, in addition, led the growth in supply, as the first half of 2019 supply reached 2,323.9 tonnes, which is the highest since 2016,” the report said. It also showed that the gold price broke through $1,400/oz for the first time since 2013. Among the factors driving this rally were expectations of lower interest rates and political uncertainty, with further support coming from strong central bank buying.
