Indonesia gold demand exceeds Thailand, Vietnam combined

Indonesia's gold demand has surpassed the combined figures of Thailand and Vietnam, according to the World Gold Council's second quarter report. The Southeast Asian nation led the region with 14.5 tonnes of gold sales in Q2 alone, marking the highest sales in the region. The World Gold Council attributed this surge to currency weakness and concerns over the domestic economic outlook, emphasizing gold's role as a store of value.

Indonesia's bullion ambitions were formalized earlier this year with the introduction of a bullion system roadmap, a strategic initiative to bolster the national bullion ecosystem and support downstream gold sector development.

However, Indonesia's gold jewelry demand declined by 10% year-on-year to 3 tonnes, reflecting a thirteenth consecutive year-on-year decrease. Consumers, facing economic challenges, are increasingly opting for lower-purity jewelry.

Southeast Asia, including Indonesia, Malaysia, Singapore, Thailand, and Vietnam, recorded a total of 36.7 tonnes in gold bar and coin sales during the second quarter, marking a 7.6% year-on-year increase. Despite this regional growth, global gold bar and coin sales dropped by 3% to 307.1 tonnes.

Louise Street, a senior markets analyst at the World Gold Council, suggested that bullion investment could fuel growth in the second half. She noted, however, that the demand mix might shift, with over-the-counter activity and demand from Asian investors likely to gain prominence. Western gold exchange-traded fund interest, on the other hand, may become more sensitive to real yields, U.S. monetary policy expectations, and the dollar.