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A Closer Look: The Gold Demand Reports by the WGC

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ETF flows

The third-quarter gold demand reports by the WGC (World Gold Council) were out on Thursday, November 12. According to the reports, demand for gold bars, coins, and jewelry climbed to its highest point in the last two years in the third quarter of 2015. India remains the leading country, preceding China in gold demand figures. India and China together account for almost 45% of global demand for gold.

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The plummeting prices in July may have likely given backing to the continued demand for the precious metal. The ETF outflows may have contributed to the price fall in July for precious metals. The flows in turn buoyed consumer demand, especially for gold. The gold-backed ETFs like the SPDR Gold Shares ETF (GLD) and the iShares Gold Trust (IAU) fell 8.8% and 8.7%, respectively, on a year-to-date basis.

Overall demand touched 1120.9 tons by the end of September, that is, the third quarter. The buying of bars and coins rose by a third due to the lower prices. Growing global instability, the conflict between Russia and Ukraine, and the crisis in Greece may also be a reason behind the buying surge.

Mine supply

The total supply in the third quarter was 1,100 tons, rising 1% year-over-year. Total mine supply remained marginally changed, rising 3% year-over-year. The third quarter figures were, however, lower by 1%, reaching 828 tons in 3Q15 compared to the 836 tons in 3Q14.

The gold mining companies also suffered in the third quarter. Stocks like Kinross Gold (KGC), IamGold (IAG), and Eldorado Gold (EGO) fell 32.5%, 48.5%, and 30.6%, respectively, on a trailing-one-year basis. These stocks together make up almost 8% of the VanEck Vectors Gold Miners ETF (GDX).

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