Demand for Gold Surges in Third Quarter; Chinese On Pace for Record

Investors and central banks around the world are buying gold.

Overall worldwide demand for the yellow metal surged during the third quarter. According to a Reuters report, demand for gold coins and gold bars, along with buying by central banks, drove a 7% Q3 increase.

Demand for gold coins and bars jumped by 26% year-on-year in the last quarter, GFMS analysts at Thomson Reuters reported in the Q3 update of their Gold Survey 2015. Retail investment surged in top consumers India, China and Germany, with buying rising 30%, 26% and 19% respectively. Those three markets alone accounted for an additional 26 tons of retail buying.”

Gold purchasing by central banks surged 13% to 132 tons in Q3. Analysts expect central banks to become net buyers of gold for a sixth consecutive year in 2015.

Russia is expected to rank as the world’s leading official-sector gold buyer this year. As we reported last week, Russia increased its holdings 34.2 tons in September. That followed on the heels of a 1 million ounce increase in gold reserves in August, as the country tries to minimize its exposure to the dollar.

China’s central bank also upped its reserves another 1% in September. The People’s Bank of China added 16.2 tons in August and nearly 19 tons in July, a steady 1% increase each month.

It’s not just the central bank buying gold in China.

Overall gold consumption on mainland China may meet or exceed the 2013 record according to the Chinese Gold & Silver Exchange Society, as reported by Bloomberg:

Buying in mainland China, which vies with India as the world’s largest consumer, picked up after the stock-market turmoil this year and August’s surprise devaluation, according to Haywood Cheung, chairman of the supervisory committee at the century-old bullion bourse. Demand in Hong Kong may expand 25% this half after a lackluster first six months, he said in an interview.”

Consumer demand in China totaled 973.6 metric tons last year. According to data released by the World Gold Council, consumption was at 497.3 tons through the first half of 2015. According to GFMS analysts, Chinese gold jewelry demand edged up half a percent year-on-year.

Cheung said Chinese investors show a preference for gold.

Investors still prefer gold as they don’t have many alternatives in terms of investment choices. Also, there’s a general feeling there’s less price uncertainty now.”

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