June was a significant month for the gold market as it broke out of a multi-year trading range and hit a six and a half year high. The World Gold Council (WGC) reported that the increase in gold prices was driven by extremely strong purchasing from government central banks and a rise in deposits into exchange-traded funds (ETFs).
The average price for gold in June 2019 was 1.356,65 USD an ounce. The lowest was 1.305,65 USD an ounce while the highest was 1.423,27 USD an ounce. Average gold price in 2019 was $1,393.34.
Alistair Hewitt, the head of market intelligence at the WGC, noted that June was a very good month for gold. The sharp increase in gold prices also led to a 15% growth in gold-backed ETF assets, the largest monthly increase since 2012.
According to the WGC’s second quarter report, central banks added a substantial 224.4 tons of gold to their inventories in the second quarter of 2019, bringing the total for the first half of the year to 374.1 tons. Meanwhile, ETFs increased their holdings by 67.2 tons in the same period, pushing their inventory to a six-year high of 2,548 tons.
The growth in supply was also a contributing factor to the increase in gold prices. In the second quarter of 2019, gold supply grew by 6% to 1,186.7 tons, driven by a record 882.6 tons of second quarter gold mine production and a 9% jump in recycling to 314.6 tons. Over the first half of the year, supply reached 2,323.9 tons, the highest level since 2016.
According to recent reports from the World Gold Council, demand for gold reached a three-year high in the first half of 2019, as central banks around the world purchased a record 374.1 tons of the metal. During the second quarter of the year, central banks added another 224.4 tons to their inventories, pushing total purchases to over 600 tons in just six months.
At the same time, exchange-traded funds have been increasing their holdings of gold, with total ETF inventories reaching a six-year high of 2,548 tons in the second quarter. This growth has been driven in part by a growing sense of uncertainty about the global economy, as investors look for safe haven assets to protect their wealth in a time of heightened volatility.
Gold Price to Fall Off in July 2019?
The year 2019 has been marked by financial market turbulence and a shift towards accommodative monetary policies, which is expected to drive demand for gold as an investment. The performance of the stock market, which saw peaks and troughs throughout the first half of the year, has heightened uncertainty among investors, leading them to seek stability through gold. Additionally, with central banks around the world adopting a more supportive monetary stance, bond yields have reached record lows, further fueling interest in gold.
Despite these positive trends, however, there are some analysts who remain concerned about the future of the gold price. Some experts have argued that the recent rally may be short-lived, as the current drivers of demand are likely to fade in the months ahead. Furthermore, many believe that the price of gold is being artificially inflated by the recent buying spree, and that prices may eventually come back down as investors start to sell off their holdings.
In this video, David Jones from Capital.Com provides an update on the current state of the gold market. He notes that it has been a disappointing few month for gold bulls as the price has not risen since its high in February. However, he believes that the current moment is crucial for the recovery that began in August. He analyzes the last 10 months of gold prices, highlighting the trends and corrections that have taken place. He points out key levels to watch, such as the April lows at 1265 and the May lows at 1300, and believes that if the price can stay above these levels, the sentiment will be more bullish. He also highlights the importance of regaining the 1300 area and targeting the trend since August, which could bring the price back up to 1345.
Despite fluctuations in gold prices, driven by changing investor expectations, the long-term outlook for gold remains positive. The weaker economic growth may temporarily dampen consumer demand for gold, but structural reforms in India and China are expected to sustain demand over the long run. As markets continue to experience fluctuations, gold is likely to remain an attractive investment option as investors seek to mitigate risk.