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Oct. 27, 2021, 9:00 p.m. EDT

Third-quarter global gold investment falls by more than half year-on-year, new report finds

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Myra P. Saefong

Total global gold demand posted a year-over-year decline for the third quarter, with investment in the precious metal down by more than 50% — led by a quarterly outflow in gold-backed exchange-traded funds — according to a report from the World Gold Council released Wednesday evening.

In the third quarter, world gold demand, excluding over-the-counter trades, totaled 831 metric tons, down 7% from the same period a year ago, the report said. The World Gold Council said the decline was “almost exclusively driven by ETFs,” which saw modest outflows this year, in contrast to “very large inflows” in the third quarter of last year.

Total global gold investment fell by 53% to 235 metric tons for the quarter.

Within that investment segment of gold demand, bar and coin investment for the quarter rose 18% year-on-year to 261.7 metric tons as “price weakness during the quarter was used by many as a buying opportunity,” the report said.

Offsetting the rise in bar and coin investment, however, global gold-backed ETFs saw outflows of 26.7 metric tons. The same period a year earlier had seen inflows of 273.9 metric tons. ETF outflows were concentrated in North America, with “strong outflows in the larger, more liquid ETFs likely being sourced for their liquidity as the price of gold fell,” the report said.

For the third quarter, most-active gold futures /zigman2/quotes/210034565/delayed GC00 -0.03% /zigman2/quotes/210039437/delayed GCZ21 -0.02% prices fell 0.8%, according to Dow Jones Market Data.

Read Wednesday’s column: Gold ends higher, but stays below the key $1,800 mark

Gold ETF flows “generally moved in step with the gold price” during the third quarter, the World Gold Council said, adding that the year-to-date ETF outflows total 156 metric tons, the largest since 2013.

In the bar and coin segment of investment demand, however, “long-term investors took advantage of the price drop to add to their holdings,” Juan Carlos Artigas, global head of research at the World Gold Council, told MarketWatch.

Central banks also “significantly added to their gold reserves and are poised to exceed the five-year average for 2021,” he said. Still, central bank gold-buying in the third quarter was modest by recent standards, with net purchases slowing to 69 metric tons from 191 metric tons in the second quarter, the World Gold Council report showed.

Looking ahead, the report said investment demand for gold should “remain robust” in the fourth quarter. “Gold could increasingly appeal to local investors as pressure on China’s economic growth intensifies,” it said.

Meanwhile, Artigas said the World Gold Council expects continued inflation risks to support gold investment demand and “mitigate potential headwinds from higher interest rates.”

/zigman2/quotes/210034565/delayed
US : U.S.: Nymex
$ 1,784.10
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Volume: 106,555
Dec. 8, 2021 4:59p
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/zigman2/quotes/210039437/delayed
US : U.S.: Nymex
$ 1,782.30
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Volume: 1,383
Dec. 8, 2021 4:16p
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Myra P. Saefong is on the markets team in San Francisco. She has covered the commodities sector for MarketWatch for more than 10 years. She has spent the...

Myra P. Saefong is on the markets team in San Francisco. She has covered the commodities sector for MarketWatch for more than 10 years. She has spent the bulk of her years at the company writing the daily Futures Movers and Metals Stocks columns and has been writing the weekly Commodities Corner column since 2005. Myra has been with MarketWatch since 1998 and holds a master’s degree in English literature.

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