Darren Kugler
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Darren Kugler in Commodities,

Gold suffers weakest third-quarter global demand in 8 years

Gold saw its weakest third-quarter global demand since 2009 as inflows of the metal into the gold-backed exchange-traded funds slowed, and tax and regulatory changes hurt demand from India, according to a report released by the World Gold Council early Thursday.

Worldwide gold demand fell 9% in the third quarter of this year from the same quarter a year ago, to total 915 metric tons, the report said.

While ETFs saw positive inflows, at 18.9 metric tons, the size of the inflows were down 87% from the 144.3 metric-ton influx seen in the third quarter of 2016, data showed.

During that period in 2016, “gold rallied strongly after the surprise result of the British referendum and in anticipation of a contested U.S. election, and ETF inflows followed suit,” Juan Carlos Artigas director of investment research at the World Gold Council, told MarketWatch.

In contrast, during the third quarter of this year, “the gold market was pulled in different directions: Geopolitical uncertainty was a tailwind for gold, but higher interest rates and a stronger dollar were headwinds, especially for U.S. investors.”

In the U.S. and abroad, “a bullish stock market is capturing a lot of investor flows,” though there are “still concerns about the sustainability of this trend,” as “uncertainty remains high,” said Artigas, who recommends that investors allocate gold to their portfolios given that it has been a source for returns, it is an “effective” diversifier and a source of liquidity.