The Global Gold Market [Infographic]

Garry Bidwana 3m 831 #gold

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Would You Like To Know About The Gold Market?

Gold Purity

Gold is, without question, the most deliberately undervalued commodity in the world. It is a resource so precious that, while the value of other commodities will come and go, gold will constantly remain much sought-after, even if the reasons for its enormous valuation fluctuate and differ from one region to another.

Currently, gold is valued mostly for its use in jewelry, even though demand for this subsector is notably lower than it has been 5-6 years ago. It has been especially hit in Asian markets, with poor consumer sentiment affecting its value in China, the Middle East continuing to experience geopolitical tension and Indian consumers intrinsically wary of price fluctuations.

In contrast to the declining demand for jewelry, gold demand as regards investment is riding the crest of a wave. Physical bar and coin demand will always be high, while exchange traded products (ETPs) are experiencing substantial growth. Indeed, its inflows for 2016 were 15% greater than the combined outflows of the previous two years, with current ETP assets at their highest level since 2012.

Overall, the global demand for gold is increasing, not least from Western investors. During 2016, the price of gold grew considerably in almost all the world’s leading economies, growing by almost 40% in the UK in one year alone. Its 2016 growth in China and the USA, two of the world’s strongest markets, exceeded 20%.

As this infographic from Eazy Cash shows, gold is a commodity whose value might diminish over short time periods, but will never go out of fashion like other commodities.

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The Global Gold Market

Gold is one of the most sought-after commodities on Earth and it has multiple uses and identifying the most prevalent market trends.

Global Gold Demand per category

Overall Demand

Category Tonnes US$
Jewellery 493.1 $21,161.4m
Investment 335.7 $14,404.2m
Technology 82.3 $3,534.0m
Central Banks & financial institutions 81.7 $3,504.3m
TOTAL 992.8 $42,603.9m

Investment Demand

Sub-category Tonnes US$
Physical bar demand 139.4 $5,984.2m
Official coins 34.3 $1,473.7m
Medals & imitation coins 16.3 $698.9m
Total bar & coin demand 190.1 $8,156.8m
Exchange Trade Funds & similar products 145.6 $6,247.4m
TOTAL 335.7 $14,402.2m

Technology Demand

Sub-category Tonnes US$
Electronics 65.1 $2,793.2m
Other industrial/technological uses 12.8 $550.0m
Dentristry 4.4 $190.8m
TOTAL 82.3 $3,534.0mm

Average Gold Price Worldwide

  • USA: $1,334.80/oz
  • Turkey: TL127.20/g (TL3,606.12/oz)
  • China: RMB286.10/g (RMB8,110.94/oz)
  • Eurozone: €1,195.90/oz
  • India: R2,873.39/g (R81,460.60/oz)
  • UK: £1,1016./oz
  • Switzerland CHF41,860.20/kg (CHF1,186.71/oz)
  • Japan ¥4,392.30/g (¥124,521.70/oz)

Countries with the Largest Gold Reserves

  1. USA (8,133.5 tonnes)
  2. Germany (3,378.2 tonnes)
  3. Italy (2,451.8 tonnes)
  4. France (2,435.8 tonnes)
  5. China (1,828.6 tonnes)
  6. Russia (1,506 tonnes)
  7. Switzerland (1,040 tonnes)
  8. Japan (765.2 tonnes)
  9. Netherlands (612.5 tonnes)
  10. India (557.8 tonnes)

World’s Largest Gold Consumers

  1. China (984.5 tonnes)
  2. India (848.9 tonnes)
  3. USA (192.8 tonnes)
  4. Germany (123.8 tonnes)
  5. Thailand (90.2 tonnes)
  6. Saudi Arabia (84.5 tonnes)
  7. Turkey (72.1 tonnes)
  8. Iran (70.9 tonnes)
  9. Vietnam (63.4 tonnes)
  10. Indonesia (59 tonnes)

Key Trends in the Gold Market

Gold price on the rise

  • The price of gold has risen substantially in almost all the major world economies during 2016.
  • From December 2015 to September 2016, it has increased by 39.5% in the UK, 26% in China, 20.6% in teh USA, and 18.4% in the Eurozone.
  • The dramatic upsurge in the gold price is attributed to a near-unprecedented level of investment inflows.

Huge investment demand

  • Investment demand for the 1st half of 2016 reached a record 1,063.9 tonnes, a full 16% higher than the previous peak, which has been set in 2009.
  • Investment has been the largest component of the gold demand throughout 2016. Never before has it had such a status for more than 3 months.
  • The upsurge in investment demand is due to a greater gold demand generally from Western investors.

Exchange-Traded Products (ETPs) continue to grow

  • ETPS have grown continually over the course of 2016, the only component to show increased growth in each quarterly period.
  • The total for ETP assets under management is 2,335.6 tonnes, the highest in almost 4 years.
  • Inflows for the first 9 months of 2016 stood at 725 tonnes, exceeding cumulative outflows from the previous 10 quarterly periods by 15%.

India’s tough transition to transparency

  • The Indian government’s renewed push towards accountability and regulation of its economy has heavily impacted on gold demand within the country.
  • India’s gold market is also suffering from high, volatile prices of the commodity and a reduction in people’s disposable income from rural inflation.

Recycling reaches 4-year high

  • A combination of heightened gold prices and structural factors within India has resulted in significant flows of recycled gold.
  • Some gold consumers have been readily selling a portion of their gold holdings when the time seems right, most notably in response to near-term price movements.
  • Recycled gold holdings for the 3rd quarter of 2016 stood at 341 tonnes, a 30% increase on the same period in 2015.

Jewellery on the wane

  • The continued increases in gold prices have impacted the global demand for jewellery.
  • It has especially been hit in Asian markets – India tends to be wary of price instability. China is battling with poor consumer sentiment and the Middle East’s challenging geopolitical situation continues to hamper its gold market.
  • Jewellery demand for the first 6 months of 2016 amounted to $36.3 billion, the lowest it has been in 6 years.