Global demand for gold slowed in the second quarter of the year, after inflows into exchange traded funds (ETF) dropped from last year’s record pace, according to a World Gold Council report.
At 953.4 tonnes, demand was 10 per cent lower than 2016, while the first half of the year highlighted a 14 per cent slowdown to 2,003.8 tonnes.
The year-on-year comparisons are affected by record ETF inflows in 2016, which saw a surge in investment in the first half of the year.
While investors continued to buy gold-backed ETFs in the second quarter of 2017 and holdings for the first half of this year were up by 167.9 tonnes, “this pales into comparison with last year’s record growth”, the report said.
Factors that affected the “more erratic” investment pattern included monetary policy "normalisation" following the US Federal Reserve’s decision to raise rates; the gold price, which rose by 8 per cent in the first half of the year, and geopolitical tensions.
Western investors in particular were “attracted by gold’s properties as an insurance asset”, the report said.
“Central bank net purchases of 176.7 tonnes were also slightly lower in the first half (minus 3 per cent),” the report said.
However, bar and coin investment improved along with jewellery demand – although this sector remains weak in a long-term context.
Strong gains in India led the recovery in the jewellery segment, where second quarter demand shot up by 126.7 tonnes compared with 89.8 tonnes in the same period last year. The demand was boosted by festivals, weddings and an improved rural sentiment after the government continued to replace the currency that was removed from the the system by demonetisation last November.
“Global demand for gold jewellery of 480.8 tonnes was 8 per cent higher year-on-year, but Q2 2016 was itself very weak; demand remained well below the five-year quarterly average of 586.2 tonnes,” the report said.
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On Women's Day
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SCHEDULE
December 8: UAE v USA (Sharjah Cricket Stadium)
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Cast: Olivia Cooke, Bill Nighy, Douglas Booth
Three stars
While you're here
Bio:
Favourite Quote: Prophet Mohammad's quotes There is reward for kindness to every living thing and A good man treats women with honour
Favourite Hobby: Serving poor people
Favourite Book: The Alchemist by Paulo Coelho
Favourite food: Fish and vegetables
Favourite place to visit: London
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Jigra
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Director: Laila Abbas
Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum
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● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
Get Out
Director: Jordan Peele
Stars: Daniel Kaluuya, Allison Williams, Catherine Keener, Bradley Whitford
Four stars
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The specs: 2018 Volkswagen Teramont
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Engine 3.6-litre V6
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Army of the Dead
Director: Zack Snyder
Stars: Dave Bautista, Ella Purnell, Omari Hardwick, Ana de la Reguera
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Cricket World Cup League 2
UAE squad
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Friday, November 1 – Oman v UAE
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Company profile
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Four reasons global stock markets are falling right now
There are many factors worrying investors right now and triggering a rush out of stock markets. Here are four of the biggest:
1. Rising US interest rates
The US Federal Reserve has increased interest rates three times this year in a bid to prevent its buoyant economy from overheating. They now stand at between 2 and 2.25 per cent and markets are pencilling in three more rises next year.
Kim Catechis, manager of the Legg Mason Martin Currie Global Emerging Markets Fund, says US inflation is rising and the Fed will continue to raise rates in 2019. “With inflationary pressures growing, an increasing number of corporates are guiding profitability expectations downwards for 2018 and 2019, citing the negative impact of rising costs.”
At the same time as rates are rising, central bankers in the US and Europe have been ending quantitative easing, bringing the era of cheap money to an end.
2. Stronger dollar
High US rates have driven up the value of the dollar and bond yields, and this is putting pressure on emerging market countries that took advantage of low interest rates to run up trillions in dollar-denominated debt. They have also suffered capital outflows as international investors have switched to the US, driving markets lower. Omar Negyal, portfolio manager of the JP Morgan Global Emerging Markets Income Trust, says this looks like a buying opportunity. “Despite short-term volatility we remain positive about long-term prospects and profitability for emerging markets.”
3. Global trade war
Ritu Vohora, investment director at fund manager M&G, says markets fear that US President Donald Trump’s spat with China will escalate into a full-blown global trade war, with both sides suffering. “The US economy is robust enough to absorb higher input costs now, but this may not be the case as tariffs escalate. However, with a host of factors hitting investor sentiment, this is becoming a stock picker’s market.”
4. Eurozone uncertainty
Europe faces two challenges right now in the shape of Brexit and the new populist government in eurozone member Italy.
Chris Beauchamp, chief market analyst at IG, which has offices in Dubai, says the stand-off between between Rome and Brussels threatens to become much more serious. "As with Brexit, neither side appears willing to step back from the edge, threatening more trouble down the line.”
The European economy may also be slowing, Mr Beauchamp warns. “A four-year low in eurozone manufacturing confidence highlights the fact that producers see a bumpy road ahead, with US-EU trade talks remaining a major question-mark for exporters.”
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Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.