Turkish tycoons and rich entrepreneurs are propping up the world Gold price as cautious central banks slow down the buying of the yellow metal.

Gold Demand in the second quarter fell slightly by 2% year on year to 921t. This was down to a marked deceleration in  demand from the world’s  central banks, according to the World Gold Council – the lobby group for the precious metal  financed by mining companies.

Turkish tycoons prop up demand. 

Bar and coin sales increased by 6% year on year to 277t driven by the wealthy of Turkey looking to the metal as a safe haven to store value. The country has seen the biggest gold buying binge for 16 years.

Wealthy business types in Turkey are filling their safes with bars and coin in an attempt to protect their fortunes from outrageous fortunes in their economy. 

High net worth individuals purchasing.  

Most of these sales have been through the informal traders in Turkey’s bazaars – the home to the country’s vast over the counter OTC sector.

John Reade, chief market strategist at the WGC, estimated that more than a third of the 355 tonnes of OTC demand was attributable to Turkey.

“There has been an accumulation of gold which looks like OTC activity related to high net worth individuals and corporates purchasing,” he said.  

Currency weakness, dizzying inflation.

The reason is, the Turkish lira fell to a record low amid political instability surrounding the country’s elections in May.

“This is the highest first half year since 2007 when Turkish lira gold prices were a fraction of their current record levels. Presidential elections, dizzying inflation and currency weakness all contributed to drive demand up,” says the World Gold Council in its quarterly report. 

Jewellery still glitters.

The sales in Turkey also compensated for a flattening of demand for gold in the consumer electronics sector . Consumption in this sector held at 70t for the second consecutive quarter.

Jewellery – one of the great drivers of gold demand – managed a modest improvement despite high prices. Demand for jewellery fabrication was up 3% year on year to around 491t.

Record production at the mines.

On the supply side, the mines saw record output period in H1 producing 1,781t of the yellow metal.

Overall gold supply was higher year on year at 1,255t lifted by growth in most of the segments. 

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