Market roundup | Funds are losing their appetite for gold
Gold demand falls 10% in June quarter. In other news, diesel refining margins rise quarter-on-quarter, global air cargo growth hits seven-year high
Globally, demand for gold fell by 10% in the June quarter when compared to the year-ago period.
The cumulative fall for the first six months of 2017 on a year-on-year (yoy) basis was sharper at 14% to 2,003.8 tonnes. The main reason for this was the contraction in exchange traded fund (ETFs) flows. From a huge rise in demand in the year-ago period due to political and economic uncertainty across the globe, ETF flows receded.
The present rally in equity markets across most countries has also brought down interest in precious metals as an investment option.
As expected, June quarter demand for jewellery surged in India contributing to the 8% growth year-on-year. Even the net central bank purchases fell by a marginal 3% in the first six months, with Turkey adding to its gold reserves, which is significant after 1980.
Diesel refining margins up quarter-on-quarter
September 2017 quarter Asia diesel refining margins are up $2 a barrel quarter-on-quarter, a nine-month high, said Credit Suisse Securities (India) Pvt. Ltd, adding that diesel accounts for approximately 42% of Indian refiners’ output, and margin strength helps Reliance Industries Ltd and oil marketing companies (OMCs).
This strength in diesel is a positive surprise, said the brokerage. Credit Suisse attributes it to stronger demand in China and India but more importantly, a large increase in refinery outages year-on-year.
Global air cargo growth highest in seven years
The global air freight markets, measured in freight tonne kilometers, grew by 10.4% in the first half of 2017. This is the strongest first half-year performance since air cargo’s rebound from the global financial crisis in 2010, the International Air Transport Association (IATA) said in a note.
Another statement by WorldACD, an air cargo market data provider, says volume growth in the second quarter of calendar year 2017 was the best quarter for the industry in almost seven years. Volumes in June increased 10.5%.
Encouragingly, average distance between origin and destination of shipments continues to increase. “Yield worldwide, measured in USD, was 7% higher, a big bonus for airlines and a development we have not been able to report since the recovery of 2010-2011,” WorldACD said on the June air cargo traffic.
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