Sales of physical gold jumped 8 percent according to the recent World Gold Council’s report “Gold Demand Trends for the Third Quarter 2015.”
Total gold demand from July to October was 1,120.9 tons. Gold sales were led by robust demand for gold bars and government-made bullion coins. Sales of gold jewelry grew a strong 6 percent and demand from central banks was the second highest on record.
Gold bars and bullion coins were snapped up by both individual and institutional investors.
Economic data in the third quarter showed continued deterioration of the U.S. and global economies. That led the Federal Reserve to hesitate raising interest rates. Combined with low gold prices, investors bought 295.7 tons of gold. That is a 27 percent increase from the second quarter and a 33 percent increase year-on-year.
Gold bullion coin sales nearly doubled from the second quarter to 76.1 tons. This was the second highest quarterly sales over the last 15 years. The United States Mint sales of American Eagle gold bullion coins reflected this global rebound.
American investors were not the only ones interested in gold bars and bullion coins. Europe's bar and coin demand jumped by a third and China’s demand rose by 20 percent.
Gold jewelry made a comeback. Year-on-year global demand increased from 594.1 tons to 631.9 tons. India led the resurgent demand for gold jewelry with sales up from 184.2 tons in 2014 Q3 to 211.1 tons in 2015 Q3, or a 15 percent increase. China’s gold jewelry sales were up from 181.2 tons in 2014 Q3 to 187.6 tons in 2015 Q3, or a 4 percent increase.
Finally, central banks added 175.0 tons to their reserves in the third quarter of 2015. It was the second highest quarter of central bank gold purchases on record. Russia led other governments by adding 77.2 tons.
They have added a total of 144 tons so far in 2015. China added 50.1 tons, bringing their total to 1,708.5 tons. This makes China the country with the fifth largest gold reserves after leapfrogging over Russia.
While gold prices continue to sag in anticipation of the Federal Reserve raising rates in the near future, the demand for physical gold has surged.
Lower prices and increasing concerns over the state of the world economy have helped interest in physical gold rebound.
Wherever there is greater economic uncertainty, diversifying into some physical gold continues to be a popular strategy.
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