Gold isn’t so shiny anymore. Globally, demand for the precious metal has fallen to its lowest level since late 2009, according to the World Gold Council. In the third quarter of 2017, demand for the haven asset was 915 metric tons, 9% lower than a year earlier.
Stock markets have been setting one record high after another this year, so investors have seemingly decided they don’t have much need for gold, often bought as a hedge during downturns. Total investment demand for gold dropped 28% in the third quarter, to 241 metrics tons, compared with a year earlier. Gold-backed ETFs recorded a severe drop in inflows, down 87% from last year.
Investors are reluctant to bet against the stock market, the World Gold Council said in its latest report on the market. It’s not hard to see why. The S&P 500 is up 15% this year and has just clocked 104 months in a bull market.
Even the escalating war of words (and tweets) between the US and North Korea hasn’t convinced people to hoard gold in recent quarters. US demand for gold bars and coins this year is the lowest since 2006.
There are still some keen buyers of gold out there. Demand for gold bars and coin increased 17% globally, with China making the biggest contribution. More Chinese investors are turning to gold amid worries about the potential depreciation of the yuan and government restrictions on real estate investments.
Central banks also stepped up their purchases, with demand rising by 111 metric tons in the third quarter, 25% higher than the year before; almost all of the buying came from Russia and Turkey. Also, for the first time since 2010, there has been an increase in demand for gold used in technology, such as memory chips and 3D sensors.