Quick Take: Gold Demand Trends Report
NEW YORK (TheStreet) -- The latest gold demand report showed a drop in demand. Or did it?
TheStreet's Joe Deaux asked Marcus Grubb, managing director of Investment at the World Gold Council, about second-quarter gold demand.
Grubb said gold in the quarter hit 856.3 tons, down 12% from the same quarter last year. However, the report was skewed by "paper gold," or exchange-traded funds, versus physical gold. Gold ETF outflows amounted to 402 tons, but physical demand was quite high: Consumer demand jumped 58%, jewelry demand was up 37% and bar and coin demand rose 70%.
Grubb added that while investors and traders in the ETFs seemed to be selling in the wake of an improved U.S. economy and expected tapering efforts from the Federal Reserve, it lowered the price of gold for the entire world.The yellow metal saw a large increase in demand from countries such asChina and India because of this. Oddly, central banks were not the big buyers as the consensus estimate. Grubb said that many times central banks time their purchases for when prices are favorable. However, when the price action seems uncertain, like it was in the second quarter, they are more likely to wait for it to stabilize. Grubb concluded that many bearish positions seem to have been lifted in the futures markets, and although bullish positions aren't being rushed back in to place, it's still a promising sign. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell
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