Consumer gold demand rockets by more than half in Q2 – WGC

Gold consumer demand rose by more than half in the second quarter of this year thanks to strong demand in China and India, the World Gold Council (WGC) said.

Recent falls in the gold price have boosted demand significantly – it rose 53 percent in the April-June period from the same three months of last year, the WGC said in a report on Thursday.

“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,” managing director Marcus Grubb said.

In the second quarter, the price of gold continued to decline, falling from a high of $1,604.15 in April to a low of $1,180 in June. The metal was last quoted at $1,337.55/1,338.40 per ounce.

“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,” the WGC said.

“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,” it added.

Second-quarter global jewellery demand rose 37 percent to 576 tonnes – its highest since the third quarter of 2008 – from 421 tonnes in the same quarter of last year, the WGC said.

In China, demand was up 54 percent compared with a year ago while in India demand was up 51 percent. Elsewhere, demand in the Middle East region was up by 33 percent and up 38 percent in Turkey.

Bar and coin investment grew 78 percent globally compared with the same quarter last year, topping 500 tonnes in a quarter for the first time.

In China, demand for gold bars and coins surged 157 percent, while in India it jumped 116 percent to a record 122 tonnes. Taking jewellery demand and bar and coin investment together, global consumer demand totalled 1,083 tonnes in the quarter, up 53 percent.

Central banks were net buyers of gold for the tenth consecutive quarter, purchasing 71 tonnes. This reinforces the trend that began in 2011, the WGC said.

Gold holdings in physically backed exchange-traded funds, which in 2012 accounted for six percent of global gold demand, fell by just more than 400 tonnes, driven by hedge funds and other speculative investors – predominantly in the US – continuing to exit their positions.

Eddie van der Walt

About Eddie van der Walt

London-based, South African-born metals markets reporter, currently focusing on precious metals and the London Metal Exchange. All that glitters must be sold. Twitter: @EvdW