WGC Report: Gold Demand Soars to New Heights in Q3 with Resurgence of Western ETF Investors

The World Gold Council (WGC) recently reported that global gold demand surged to a record high in the third quarter of 2021, driven largely by a strong comeback from Western investment markets, particularly gold-backed exchange-traded funds (ETFs). This resurgence in gold investment demand reflects investors’ growing concerns over inflation, economic uncertainty, and geopolitical tensions, which have fueled a renewed interest in the safe-haven properties of gold. According to the WGC’s latest Gold Demand Trends report, total gold demand in Q3 2021 reached 1,290.1 tonnes, up 11% from the same period last year. Of this total, investment demand accounted for 273.5 tonnes, marking a substantial 32% increase year-on-year. Notably, the demand for gold ETFs was a standout performer during the quarter, with net inflows of 73.1 tonnes, the highest level since Q2 2016. The resurgence in Western ETF demand can be attributed to a confluence of factors. Firstly, the prolonged ultra-low interest rate environment has diminished the opportunity cost of holding non-yielding assets like gold. With central banks around the world maintaining accommodative monetary policies to support economic recovery, investors are seeking out alternative assets to hedge against potential inflationary pressures. Moreover, the escalating concerns over the impact of the COVID-19 Delta variant and the uneven global economic recovery have prompted investors to turn to gold as a safe-haven asset. The geopolitical tensions arising from conflicts in various regions, coupled with the uncertainty surrounding the pace and sustainability of economic growth, have further bolstered the appeal of gold as a store of value and a portfolio diversifier. In addition to investment demand, the WGC’s report also highlighted robust trends in jewelry and bar & coin demand during the quarter. Jewelry demand rebounded strongly in key markets, such as India and China, as economic conditions improved and consumer sentiments recovered. Meanwhile, retail investment in gold bars and coins remained solid, supported by retail investors’ continued interest in physical gold ownership. Looking ahead, the outlook for gold demand remains positive, supported by the prevailing macroeconomic conditions and evolving market dynamics. As central banks navigate the delicate balance between supporting growth and managing inflationary pressures, investors are likely to maintain their exposure to gold as a strategic asset in their portfolios. In conclusion, the record-high gold demand witnessed in Q3 2021, driven by a resurgence in Western ETF investment, underscores the enduring appeal of gold as a vital component of diversified investment portfolios. With economic uncertainties and geopolitical risks persisting, gold is poised to shine as a reliable safe haven and wealth preservation asset in the foreseeable future.