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  • Precious Metals Preview: Sentiments Largely Supportive For Gold
Gold surged to seven year highs amid falling US treasury yields, worries over global trade and strong demand. The yield on the 10-year US Treasury note recorded its largest one-day decline in more than a year as DOW tanked more than 1% after President Trump announced new tariffs on Chinese imports. The 10 year yield dropped to nearly three year low of 1.86%. This pushed up Gold in an excellent manner with the metal hitting fresh seven year highs above $1460 per ounce. MCX Gold futures for October zoomed above Rs 36300 per 10 grams amid heightened buying as the INR crashed following slide in local equities.
The global Gold demand was 1,123 tonnes (t) in Q2, up 8% y-o-y. H1 demand jumped to a three-year high of 2,181.7t, largely due to record-breaking central bank purchases, noted the World Gold Council (WGC) in its latest Gold Demand Trend update. Central bank buying and healthy ETF inflows were the driving forces behind gold demand throughout the first half of 2019. Growth in H1 jewellery demand was largely the product of a more positive environment for Indian consumers. Shifts in bar and coin investments were very much price-related. As the gold price powered its way to multi-year highs, profit-taking kicked in and retail investment all but dried up. The technology sector reduced its usage of gold due to challenging global conditions, although the outlook is for this element of demand to establish something of a floor over coming quarters. Solid growth in both mine production and recycling fed into a 2% increase in total H1 gold supply.
India's gold consumption in the second quarter of this year surged 13% on a year on year basis to 213.2 tonnes on impressive jewellery and investment demand, helping India surpass China as the biggest consumer of the metal in the world for the first time since the December quarter of 2013, the World Gold Council (WGC), noted in its latest Gold Demand Trends update. Indian jewellery demand had its best quarter of y-o-y growth since Q2 2017. Demand gained 18.7t (12%), to 168.6t compared with 149.9t in Q2 2018, largely due to two factors: a higher number of auspicious wedding days compared with 2018, and local gold prices moving lower from the levels seen in February and March. Wedding season and festival-buying spurred by lower intra-year gold prices in April and May.
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