Gold demand falls 12pc with decline in consumer appetite
LONDON, August 13, 2015
The total demand for gold was 915 tonnes in the second quarter of the year, a fall of 12 per cent compared to the same period last year, due mainly to a decline in demand from consumers in India and China, according to a report.
The World Gold Council's Gold Demand Trends report pointed out that demand in Europe and the US grew, driven by a mixture of increasingly confident jewellery buyers and strong demand for bars and coins.
Looking ahead, there are encouraging signs moving into what are traditionally the busiest quarters for gold buying in India and China, it said.
The overall jewellery demand was down 14 per cent to 513 tonnes, from 595 tonnes last year due to falls in consumer spending in Asia.
In China, slowing economic growth and a rallying stock market led to a five per cent fall in demand to 174 tonnes. In India, the heavy unseasonal rains in the first quarter and drought in the second impacted rural incomes and affected gold demand.
In addition, a dearth of auspicious days for marriages in the third quarter meant that wedding-related demand was unusually slow, leading to a fall in jewellery demand of 23 per cent to 118 tonnes.
Overall, the picture for the first half of this year in India, jewellery was down three per cent to 268.8 tonnes from 276.1 tonnes.
The US remained steady, with jewellery demand up for the sixth consecutive quarter by two per cent (26 tonnes). In Europe demand was also up, with Germany up seven per cent and the UK and Spain both growing by six per cent.
Global investment demand was down 11 per cent to 179 tonnes from 200 tonnes in Q2 last year. India was the main driver of the fall, down 30 per cent to 37 tonnes, due to uncertain price expectations and a buoyant stock market. This was countered by a rise in Chinese bar and coin demand, up six per cent to 42 tonnes.
The total supply was down five per cent to 1,033 tonnes, as an increase in mine production of three per cent to 787 tonnes in Q2 this year was offset by declining recycling levels - down eight per cent to 251 tonnes.
The indication for H2 is that mine production will slow as the gold mining industry continues to manage their costs and optimise operations in the face of challenging markets.
Alistair Hewitt, head of Market Intelligence at the World Gold Council, said: “It’s been a challenging market for gold this quarter, particularly in Asia, on the back of falls in India and China. The reverse is true for western jewellery markets, as increased economic confidence led to continued growth in consumer demand.
"It is fair to say that investment demand for the quarter remained muted given the continuing recovery in the US economy and booming stock markets in India and China during the quarter.
Jewellery market prospects look healthier for the remainder of the year with the upcoming wedding and festival season in India. In addition, falls in the gold price have historically triggered buying in price sensitive markets and we are already seeing early indications of this across Asia and the Middle East.
"Conversely, sharp falls in Chinese stock markets have shaken the largely consumer investment base and we are seeing early indications of interest in buying gold again - all illustrating the unique self balancing nature of gold demand and the diverse drivers which underpin it.” - TradeArabia News Service
