Interest in gold has declined significantly in the second quarter of this year. This forced the World Gold Council (WGC) analysts to downgrade their bullion demand forecast for the rest of the year.
According to the latest WGC report, the physical demand for gold in the first half of 2022 amounted to 2,189 tons, which is 12% more than in the same period last year.
Despite the stable demand for the precious metal in the first half of the year, the experts of the World Gold Council see prospects for its decline in the second half of the year.
The negative outlook is due to a significant slowdown in gold demand growth in the second quarter of the year.
From April to June, physical demand for the metal fell by 948 tons, or 8%, compared to the same period in 2021.
The appetite of central banks for gold significantly weakened in the second quarter. Central banks bought only 180 tons of metal during the reporting period, which is 14% less than last year.
And the worst dynamics was demonstrated in the second quarter of the year by the general investment demand for gold. According to the WGC, the figure fell by 28%.
The main reason for the outflow of capital from the gold market was the aggressive tightening of the monetary policy of the US Federal Reserve, which caused a sharp strengthening of the dollar.
Given the potential softening of inflation amid continued rate hikes, World Gold Council analysts predict a further decline in demand for the safe-haven asset.At the same time, WGC does not expect a serious collapse of the gold market.
Experts say that there are enough factors that can support demand and, as a result, gold prices until the end of the year.
According to analysts, the yellow asset will remain attractive until inflationary pressures and geopolitical uncertainty subside.
As for the ratio of supply and demand, on the basis of which the price of gold is also formed, it nevertheless indicates a further decrease in the value of the asset.
In a recent report by the World Gold Council, it is noted that as demand falls, supply, on the contrary, increases.
Thus, the total supply of gold in the world increased by 5% in the first half of the year, and metal production in mines increased by 4% in the second quarter, to 911.70 tons.