Global gold demand remained muted at 964 t in the second quarter, 4% lower year-on-year, according to the World Gold Council’s (WGC’s) latest ‘Gold Demand Trends’ report.

Speaking to Mining Weekly Online, WGC member and market relations head John Mulligan said mine production in the second quarter increased by 3% year-on-year to 836 t, the highest second-quarter production performance on record, as projects in Russia, Indonesia and Canada continued to ramp up.

“Gold recycling also grew, as currency weakness in India, Turkey and Iran boosted local gold prices and encouraged consumers to lock in profits from their holdings,” he said.

He pointed out that slower inflows into gold-backed exchange-traded funds (ETFs) created a weak comparison against the highs of last year, contributing to the lowest half-year demand since 2009, while China, the world’s largest gold market, saw a 7% rise in consumer demand.

ETF inflows continued, he stated, however, at a much slower pace compared with the high levels seen in 2016 and 2017.

“Inflows were down 46% year-on-year; however, European-listed funds saw decent inflows, we believe owing to uncertainty stemming from Italian elections and monetary policy outlook. In contrast, holdings of North American-listed funds fell by 30.6 t as investors focused on domestic economic strength,” he said.

Jewellery demand during the first half of the year was barely changed at 1 031 t.

“Weaker demand in India and the Middle East in the second quarter was only partly offset by growth in China and the US, both up 5% compared with the previous year. Indian demand fell 8% year-on-year, crimped by higher local prices, as well as by seasonal and religious factors,” he noted.

Global bar and coin investment was also virtually unchanged at 248 t.

Mulligan highlighted that stronger demand in China and Iran, fuelled by increasing geopolitical tensions with the US, were offset by falls in Turkey, India and Europe, where local prices remained elevated.

Central banks, meanwhile, added 89 t of gold to global official reserves in the second quarter, down 7% compared with the previous period.

The second quarter saw the seventh consecutive quarter of year-on-year growth in the technology sector, with demand up 2% year-on-year to 83.3 t. Gold used in electronics continued to thrive, owing to enduring demand for smartphones, game consoles and vehicles.

Demand for the first half of this year reached a three-year high of 165 t.

“It’s interesting how investors around the world have reacted to some of the risks stalking financial markets. Weaker economic prospects and tumbling currencies off the back of heightened tensions with the US boosted Chinese and Iranian gold demand, while US investors shrugged off any geopolitical concerns,” he said.

He pointed out that demand from tech companies continued to grow, with demand for the first half of this year reaching a three-year high.

The total supply of gold increased by 3% in the second quarter to 1 120 t, supported by increased mine production and recycling growth.