Global gold demand down at 5-yr low: WGC

Jewellery remains the biggest component of gold demand

Global gold demand down at 5-yr low: WGC

Global gold demand fell to a nearly five-year low by 2 per cent at 929 tonnes in the third quarter (the period from July to September 2014), the latest Gold Demand Trends report from the World Gold Council (WGC) has said. 

The reduction in gold demand may be attributed to a decline in jewellery purchases in China, which used to be the world’s largest gold consumer, which has again placed India as the world’s largest gold consumer, with an increase of 60 per cent year-on-year in jewellery demand, to 183 tonnes in Q3 2014, the second highest third quarter on record for the country.  

While the increase is partly characteristic of the weakness in the third quarter in India last year, when the government introduced import curbs and raised import duties, it also demonstrates the resilience of the country’s appetite for gold jewellery. 

Improved consumer confidence in both the domestic economy and the new government added to the positive sentiment, with strong levels of purchasing being seen in the build up to Diwali, the report said.

Dip in bar investments

In China, jewellery demand, for the third quarter ended 2014, was down 39 per cent year-on-year to 147 tonnes, but was broadly in line with both Q3 2012 and the 5-year quarterly average (of 148.2 tonnes and 154.9 tonnes respectively). There was also a 30 per cent dip in bar and coin investment. Combined demand fell 37 per cent.

According to WGC Managing Director (Investment Strategy) Marcus Grubb, “This quarter, the market continued to find its feet after an exceptional 2013, with China catching its breath and buying in the build-up to Diwali driving Indian jewellery purchases. The figures for India and China, this quarter, reinforce the need to understand the factors which underpinned an exceptional Q3 last year.”

In 2013, India was impacted by import curbs and increased import duties imposed by the previous government, whereas exceptional buying in China during the same period shaped buying patterns in 2014.”

Whilst in the US and UK, jewellery demand was strong, buoyed by ongoing economic recoveries.  

The jewellery demand in the US grew 4 per cent year-on-year to 34 tonnes, the highest third quarter since 2009. The jewellery demand in the UK had its fifth consecutive quarter of year-on-year growth.

The report reveals that Jewellery remains the biggest component of gold demand, representing more than half of all demand at 534 tonnes, which is 4 per cent lower year-on-year. Investment demand, a combination of bars and coins and exchange-traded funds (ETF), was up 6 per cent to 204 tonnes.

However, investments in bars and coins were down 21 per cent to 246 tonnes.

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