Gold demand weaker, but outlook bright

GLOBAL trends have shown gold demand has slipped in the second quarter with accelerated buying amongst central banks partly offsetting stifling demand from the jewellery and technology sectors.
Gold demand weaker, but outlook bright Gold demand weaker, but outlook bright Gold demand weaker, but outlook bright Gold demand weaker, but outlook bright Gold demand weaker, but outlook bright

According to the World Gold Council report, gold demand was trending down 7% in the second quarter from Q2 2011 and down 10% from Q1 2012.

Gold demand for Q2 measured 990 tonnes and was worth an estimated $US51.2 billion ($A48.6 billion), with gold prices averaging $1609.5 per ounce during the period.

"The global sector remained under pressure from the combination of higher average prices and weaker consumer sentiment, which has been dampened by the uncertain global economic environment," the World Gold Council said.

Despite softening demand for gold, the report indicated signs pointing towards optimism for the remainder of the year with consolidation in the gold price drawing previously discouraged consumers back to the market.

India and China continued to dominate global consumer demand, accounting for a combined 45% of total second quarter jewellery, and bar and coin demand, while Russia emerged as an increasingly prominent player in the gold market.

The report said global demand numbers were reflective of movements among India and China, which were not necessarily mirrored by other markets across the globe.

However, countries including Turkey, Egypt and Russia bucked the global trend and generated growth in gold demand.

Russia's second quarter jewellery demand grew 2% with 18.6t gold consumed, and although the rate was 3% lower than the five-year quarterly average of 19.2t, it was up 9% on earlier-year levels.

Turkey increased demand for gold by 4% to 23.1 tonnes and marked a year-on-year change was a 28% increase.

"Growth in Turkey was aided by the resumption of purchases that had been postponed during the first quarter due to the adverse weather conditions which dented demand during the period," the World Gold Council said.

The rate of decline in jewellery demand in the US slowed in the second quarter and was down 7% year on year and down 9% from Q1 2012.

Gold demand among the investment and technology sectors also weakened from earlier levels.

In the second quarter, gold demand in the technology sector slipped 5% year on year to 112.2t, however, increased by 3% compared to the first quarter demand.

"Technology demand was constrained by the combination of an escalation of European woes, with the focus turning to Spain, weak US employment figures and a slowdown in Chinese economic growth, which dampened consumer sentiment," the World Gold Council said.

Total second quarter investment demand for gold weakened by 23% to 302t gold worth $15.6 billion in value.

The trend was curved by record buying by central banks, with gold purchases more than doubling the 66.2t made in the same period last year.

Demand for gold by central banks and official sector institutions accelerated during the second quarter with gold reserves increasing to 157.5t, representing the largest quarterly net purchase by this sector since it became a net buyer in early 2009.

The official sector accounted for 16% of overall Q2 gold demand, with some central banks indicating their intentions to bolster gold reserves.

"Russia's program of buying saw the central bank add a further 22.3t to its reserves during the April to June period," the report cited.

"Total gold reserves at the end of the period stood at around 194.2t, roughly equal to 9% of total reserves."


Most read Regions

  • NEW: Digital version of PNG Report magazine - View here
  • Porgera: Barrick-PNG talks go on - Read more
  • Follow the companies investing in the PNG market - Read more

Most read Regions