The latest World Gold Council Gold Demand Trends report, which covers the period April-June 2013, highlights how recent falls in the gold price have generated significant increases in demand, most notably from consumers in China and India - by far the biggest markets for gold - compared with the same time last year.
Globally, jewellery demand was up 37% in Q2 2013 to 576 tonnes (t) from 421t in the same quarter last year, reaching its highest level since Q3 2008. In China, demand was up 54% compared to a year ago; while in India demand increased by 51%. There were also significant increases in demand for gold jewellery in other parts of the world: the Middle East region was up by 33%, and in Turkey demand grew by 38%.
Bar and coin investment grew by 78% globally compared to the same quarter last year, topping 500t in a quarter for the first time. In China, demand for gold bars and coins surged 157% compared with the same quarter last year, while in India it jumped 116% to a record 122t. Taking jewellery demand and bar and coin investment together, global consumer demand totalled 1,083t in the quarter, 53% higher than a year ago.
For the tenth consecutive quarter, central banks were net buyers of gold, purchasing 71t, which reinforces the trend that began in Q1 2011.
Demand in the technology sector was stable once again, totalling 104t, a rise of 1% on last year.
Meanwhile gold held in gold-backed ETFs, which in 2012 accounted for just 6% of the world’s gold demand, fell by just over 400t, driven by hedge funds and other speculative investors continuing to exit their positions. This was predominantly in the US.
Overall, demand for gold in Q2 2013 was 856t, down 12% on a year ago.
On the supply side, recycling fell 21% in the quarter while mine production was 4% higher than a year ago, at 732t. In total, supply was 6% lower than a year ago.
Marcus Grubb, Managing Director, Investment at the World Gold Council commented: “The second quarter continued the trend that we saw in the first, of a rebalancing in the market, as gold coming onto the market from ETF sales met with a wave of demand for bars and coins, as well as jewellery. This surge in bar and coin investment was a common theme in key markets around the world, and has been particularly prominent in the world’s biggest gold markets, India and China. This shift from West to East has been further reinforced by recent data from the LBMA showing that in June the volume of gold transferred between accounts held by bullion clearers hit a second consecutive 12-year high, buoyed by strong Asian physical demand.
“This quarter again demonstrates the unique diversity of global gold demand, as the self-balancing nature of the market apparent in the previous quarter was even more clearly in evidence. Across the decades, different sectors in the gold market have risen in prominence at different points in the global economic cycle and the current shifts are just part of the normal ebb and flow of what is an extremely liquid market.”
The average gold price for the quarter was US$1,415/oz, down 12% on the same period last year. In value terms, gold demand in Q2 2013 was US$39bn, down 23% compared to Q2 2012.
The key findings of the report are as follows:
· Consumer demand in China continued to show strong growth, totalling 276t in the second quarter, a rise of 87% compared to the same quarter last year, as investors used the lower gold price to buy in advance of expected future price rises. Jewellery demand in the quarter was 153t, up 54% on the same quarter last year, while bar and coin investment was 123t, up 157% on Q2 2012.
· Consumers in India also showed continued strong appetite for gold, with recent government measures to curb demand having had little impact on the quarter’s figures. Consumer demand was 310t, up 71% on last year. Bar and coin investment rose 116%, while jewellery demand rose by 51%.
· Bar and coin investment globally totalled 508t, a record figure, and a rise of 78% on the same quarter last year.
· Central banks remained committed to gold. Although demand of 71t in Q2 2013 was below the record quarterly figure of 165t purchased the previous year, central banks have now been purchasers of gold for ten consecutive quarters.
· There was a net outflow of 402t from ETFs in the quarter. This was more than counterbalanced by inflows into other forms of investment, such as the record 508t in bars and coins.
Gold demand and supply statistics for Q2 2013
· Second quarter gold demand of 856t (US$39bn) was down 12% compared with Q2 2012.
· Demand for jewellery was 576t (US$26.2bn) in the quarter, up 37% on last year. This was the highest figure since Q3 2008, and the highest second quarter figure since Q2 2007.
· The net outflow from ETFs was 402t (-US$18.3bn). However that was more than compensated by bar and coin investment, which saw inflows of 508t (US$23.1bn). Total investment demand, including OTC investment, totalled 257t (US$11.7bn).
· Net central bank purchases totalled 71t (US$3.2bn), 57% down on what was a record-breaking quarter a year ago. Central banks have now been net purchasers of gold for ten consecutive quarters.
· Demand in the technology sector was stable once again, totalling 104t, a rise of 1% on last year.
· Mine production in the quarter was 4% higher than a year ago, at 732t. Recycling fell 21%, leading to a total supply that was 6% lower than a year ago.