World Gold Council Q3 Update
Key highlights from the World Gold Council Q3 report:
The gold price continued its upward trend during Q3 2010, ending the quarter at US$1,307.00/oz, on the London PM fi x, 5.1% higher quarter-on-quarter. Gold’s average volatility of 13.2% in Q3 was not only lower than previous quarters but remained below that of equity and commodity indices. Concerns over the health of economic growth in the developed world, quantitative easing, continued purchases from central banks in emerging markets, healthy jewellery consumption in regions like China and usage in technological applications have all ensured that gold remains a sought after asset
Investors bought 28 tonnes of gold in the ETFs we monitor in Q3 2010, bringing their total holdings to a new high of 2,070 tonnes, worth $87 billion. In the futures market, COMEX gold net long positions remained strong throughout the quarter as many investors continued to see value in the long gold trade. Similarly, investment demand in bars and coins in North America, Europe, China, India and the Middle East during Q3 2010, while lower than the second quarter estimates, remains historically high.
Market and economic influences
Economic performance in the third quarter of 2010 was mixed. Many equity markets rebounded from the low levels seen during Q2, but economic growth and labour markets in many developed countries remain constrained. Conversely, emerging markets have seen upward revisions to their economic growth and inflation estimates. In all, this continues to be supportive of gold investment. In recent research reports, the WGC has found that gold does not appear overvalued and that even modest allocations to gold in a portfolio can help investors mitigate losses and hedge against tail risks without sacrificing long-term returns.
Gold market trends
Preliminary reports in India suggest the fi rst half of Q3 2010 witnessed robust jewellery sales, supported by a normal monsoon season. The WGC expects demand to pick-up further in Q4 on the back of the main festive season. In China and Hong Kong, the gold market appears to have maintained its strong momentum, suggesting continued positive growth during Q3 2010 relative to year-earlier levels. Sales by European central banks remained negligible while their counterparts in emerging markets continued to increase their gold reserves.
Our key data table provides you with a concise summary of gold returns, supply and demand statistics, price volatility and a correlation matrix covering gold, silver, commodities, equities and bonds.
Full report (pdf)