Mumbai: Gold demand declined 12 per cent globally to a six-year low of 914.9 tonnes in the second quarter, mainly due to a decrease in demand from consumers in India and China, according to the World Gold Council.
The demand stood at 1,038 tonnes in Q2 of 2014, the WGC Gold Demand Trends report for Q2 of 2015 showed. However, demand in Europe and the US grew, driven by a mixture of increasingly confident jewellery buyers and strong demand for bars and coins, the report added. “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,” WGC Head of Market Intelligence Alistair Hewitt said.
He said 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. The overall jewellery demand was down 14 per cent at 513tonnes, from 595 tonnes in 2014, due to fall in consumer spend in Asia, the report said. While in China the fall in jewellery demand was 5 per cent at 174 tonnes due to slow economic growth and a turbulent stock market, in India it dropped 23 per cent to 118 tonnes following heavy unseasonal rains in Q1 and drought in Q2 that impacted rural incomes and affected gold demand.
In addition, a dearth of auspicious days for marriages in Q3 meant that wedding-related demand was unusually slow. The US remained steady, with jewellery demand going up for the sixth consecutive quarter by 2 per cent at 26 tonnes. In Europe, demand was also up, with Germany up 7 per cent and the UK and Spain both growing 6 per cent.
The jewellery demand for higher grams of gold is an evolving trend seen both in Europe and the US, mostly taking a cue from the east, WGC Managing Director, India, Somasundaram PR told PTI here.
“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,” Hewitt added.
The report said total investment demand too was down 11 per cent during the second quarter at 179 tonnes compared with 200 tonnes in the same quarter of the previous year. Demand for bars and coins saw a 15 per cent drop to 201 tonnes from 238 tonnes in the previous year as the sector was affected by an expected increase in US interest rates and a continued shift towards other asset classes, notably equities, it pointed out. ETFs saw outflows totalling 23 tonnes, lower than the outflows of 38 tonnes seen in the same quarter last year.
Furthermore, it found that central banks continued to be strong buyers of gold, accounting for 137 tonnes in Q2 2015, slightly down in the equivalent quarter last year. It was the 18th consecutive quarter where central banks were net purchasers, it added. Recycling levels during the second quarter were down 8 per cent to 251 tonnes compared with 273 tonnes in Q2 of 2014, resulting in total supply falling 5 per cent to 1,033 tonnes. The year-on-year quarterly mine production increased 3 per cent to 787 tonnes in Q2 2015 as against 763 tonnes in Q2 2014.
