The gold market ended strongly in Q4 of 2014, with demand going up by 6 per cent year-on-year to 987 tonnes, driven by jewellery sector and central bank buying, according to the latest Gold Demand Trends full year report from the World Gold Council.

The total jewellery demand for 2014 was 2,153 tonnes, down by 10 per cent compared to the previous year, given the price-driven jewellery demand surge in 2013, said a statement from the report.

India – one of the two largest gold markets in the world – had its strongest year for jewellery demand since the World Gold Council’s records began in 1995, up 8 per cent on a year ago to 662 tonnes. This was driven by wedding and festival buying despite the presence of government restrictions on gold imports for most of the year, it added.

Although China saw demand decline 33 per cent year on year, it still represents the second best year for jewellery demand in China.

The investment demand was another big driver of the gold market, causing a rise of 2 per cent in 2014, from 885 tonnes in 2013 to 905 tonnes last year. Total bar and coin investment was down 40 per cent as investors who had made major purchases in 2013 held back from further purchases. This was offset by a dramatic slowdown in outflows from exchange traded funds (ETFs), from 880 tonnes in 2013 to 159 tonnes in 2014.

The central banks continued to see the value of gold as a reserve asset in 2014. Annual central bank demand was up 17 per cent to 477 tonnes.  This was particularly evident in the last quarter of 2014, when demand was up 40 per cent year on year to 119 tonnes, making Q4 2014 the 16th consecutive quarter and 2014, the fifth consecutive year that central banks were net purchasers of gold.

Total supply in 2014 was virtually unchanged compared to 2013 at 4,278 tonnes, as recycling contracted to a seven year low, offsetting annual mine production growth, which was up 2 per cent to a record 3,114 tonnes.

Marcus Grubb, managing director for investment strategy at the World Gold Council, said: “2014 was a year of stabilisation and innovation in the gold market, with annual gold demand down by just 4 per cent after the record-breaking level of buying seen in 2013.”

“It was a standout year for Indian jewellery, despite government restrictions on gold imports, reinforcing the nation’s affinity with gold. Meanwhile Chinese gold demand returned to those last seen in 2011/2012 as consumers and investors took time to digest the substantial volumes accumulated in 2013,” he said.

“What’s particularly notable about 2014 is that the striking shift in physical gold demand from West to East is now being followed by gold infrastructure development in Asia. New products and trading platforms were introduced like the Shanghai Gold Exchange International Board, the “Gold Send” mobile app in Turkey and the new kilo bar contracts in Singapore and Hong Kong  - all designed to make gold more accessible to greater numbers of buyers in the East,” he added. – TradeArabia News Service