Gold ETFs see record inflows in third quarter

Nov 22nd, 2011 | By | Category: Commodities

According to the World Gold Council’s Gold Demand Trends report, gold ETFs and similar products witnessed inflows of 77.6 tonnes globally in the third quarter of 2011, which was 58% above year-earlier levels of 49.1 tonnes.

Gold ETFs and similar products see inflows of 77.6 tonnes in the third quarter of 2011

Gold ETFs and similar products saw inflows of 77.6 tonnes in the third quarter of 2011.

Investment demand for gold in Europe reached a record quarterly value of €4.6bn, equating to 118.1 tonnes – a year-on-year increase of 135%.

The increase in overall investment demand was all the more impressive given the sharp gold price correction in September, which encouraged a wave of profit taking.

Chinese jewellery demand was 13% higher year-on-year at 131.0 tonnes, equivalent to RMB46.0bn. The bulk of this increase was seen in smaller cities as retail chains expanded their networks to meet increasing dmand fuelled by rising income levels.

China’s growing appetite for gold as a means of investment saw demand for gold bars and coins expand by 24% from year earlier levels to 60.2 tonnes.

Jewellery demand in India was sluggish during the seasonally slow months of July and August, compounded by high inflation and greater volatility in the local gold price. Buying has since recovered slightly with the onset of the festive and wedding season.

Overall, Indian jewellery demand in Q3 saw a 26% decline in tonnage, when compared to the same quarter in 2010, to 125.3 tonnes, however yearly demand to the end of September is very close to the record levels seen in 2010.

Marcus Grubb, Managing Director of Investment at the World Gold Council commented:

“Unsurprisingly investment demand for gold was a key driver during the third quarter. Increasing levels of inflation, the US credit rating downgrade, a worsening eurozone sovereign debt crisis and the lacklustre performance of many assets drove investors to increase holdings in gold in order to protect their wealth. Given gold’s proven risk mitigation properties, it is likely that investors will continue to seek protection from economic uncertainty, which shows no signs of abating.

“The long-term fundamentals for gold remain strong with a diverse and growing demand base coupled with constrained supply-side activity.”

Gold ETPs:

iShares Physical Gold ETC

iShares S&P Commodity Producers Gold ETF

Source Physical Gold ETC

DB Physical Gold GBP Hedged ETC

ETFS Gold Bullion Securities ETC

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