This summer gold has been the worst performing precious metal, with its price dropping nearly 40% lower since its 2011 peak.
What else is there to know about the world’s most revered special metal?
1) Jewellery
In Q2 of this year – April to June – gold demand dropped to a six-year low, with the biggest factor behind its decline being driven by cooling demand for jewellery.
That has slipped 14% year-on-year. Although gold is used as an investment and for Technology such as mobile phone components, jewellery is by far the largest gold ‘consumer’ with just over half of all gold being used in jewellery.
China and India are the two biggest purchasers of gold for jewellery purposes. However, in the second quarter of this year Indian demand fell by almost a quarter (-23%).
2) India
Jewellery demand in India is predominately driven by the Indian wedding season. There are a lot of marital superstitions in the sub-continent so the lack of auspicious wedding dates falling in June and July affected gold demand this summer.
That said, another key driver behind the slower demand was the extreme weather in rural India in the early part of the year which damaged crops, reduced harvest yields and consequently hurt incomes among the all-important rural population (who account for more than half of Indian gold demand).
The Indian wedding season resumes in mid-November after Diwali. Since purchases are typically made two to three months before the ceremony itself, demand is expected to return to the jewellery market shortly.
3) China
Stock market turbulence in China has been negative for the country in two ways.
As the the Chinese stock market reached its seven-year high in June, the middle-class Chinese who normally may have bought gold instead chose to pour their disposable income into the accelerating stock market.
Since then the market has lost close to half its value, which means investors who are licking their wounds either have very little money left to invest in gold or are unable to invest in anything at all.
4) Greece
The Greek crisis has seen a spike in demand for physical gold, especially from German citizens.
German investors primarily focused their attention on coins and low-denomination bars, which suggests it was small-scale retail investors who were driving demand. Peak demand arose in the wake of Greece’s referendum announcement.
5) Dentists
Historically, dentistry has been a big consumer of gold for procedures such fillings and crowns.
However, cost-conscious consumers together with the aesthetic benefits tied to ceramic fillings means that dentistry demand for gold fell to its lowest ever level earlier this year. Just 4.7 tonnes were used for this purpose in Q2 – that’s still a lot of fillings.
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