The report highlighted the fact that physical demand was up 17% in the first half of the year compared to the same period a year earlier, but this still left demand languishing far below former levels.
Indian gold demand in Q2 2017 surged by 126% year-on-year, the highest level in the last six quarters.
ETF holdings, which were falling day after day at the end of 2016, have resumed their upward trend this year, but at a much slower pace than a year earlier.
"After the rollercoaster ride of events for the gold market in 2016, from a jewellers' strike to Brexit to Trump to demonetisation, 2017 has avoided similar market moving events in the first half, at least from a gold perspective with far right candidates seeing little success in a range of European countries.
"Indeed the first half of this year has arguably been more of a reversion to normality across much of the gold market, with neither the highs (of ETF demand) or lows (of seriously struggling Asian demand) that were recorded in the first half of 2016 being repeated.
"This can be most clearly seen with the jewellery sector where global fabrication is up 22% year-on-year in the first half of this year. This seems strong but is deceptive and is actually disappointing. This is because fabrication is still down 9% compared to the same period of 2015, and that was hardly a stellar performance and last year was being hampered by a jewellers' strike in India.
"The official sector also paints a different picture depending on the timeframe for comparison; it is substantially stronger compared to a year ago when Venezuelan sales were dragging the total down, but not as high as two years ago with China absent from the market," the report said.
Total supply has shrunk by 5% in the first half of the year with mine production stagnating, producers dehedging for the third and fourth quarter in a row and a slight fall in scrap flows all contributing.
On price outlook the report says that given the introduction of the GST in India there is a relative hiatus in imports to that crucial market at present and this is leaving gold prices susceptible to softness, not least as it is often Indian demand that responds positively to price weakness.
While this means that the Northern Hemisphere summer is likely to see subdued prices we expect this to be a passing phase, albeit one that may well see prices temporarily drop below $1200.
"However, we continue to expect prices to recover later in the year as there is both a seasonal upturn in demand in Asia and a recovery in western investment. The latter may well be buoyed by geopolitical instability and/or potential correction to equity markets. Indeed, the S and P 500 is already in its second longest bull run since the Second World War," the report said.
Meanwhile, copper rose another 1.6% to $6297.75 per tonne midweek, the highest price since June 2015.
Other base metals were steady, while lead and zinc were slightly lower.
Spot gold was back over $1260 an ounce.
In softer commodities, cocoa increased $101 per tonne or 5.28% to $2013/t yesterday from the $1912 in the previous trading session, tradingeconomics.com reported. Historically, cocoa reached an all-time high of $4361.58/t in July of 1977 and a record low of $211/t in July of 1965.
Coffee increased 1.15c per pound or 0.85% to 135.95c/lb yesterday from 134.80c/lb in the previous trading session, tradingeconomics.com reported. Historically, coffee reached an all-time high of 339.86c/lb in April of 1977 and a record low of 42.50c/lb in October of 2001.
