Gold demand remains strong as buying records continue to tumble

Today’s AM fix was USD 1,377.00, EUR 1,070.01 and GBP 904.32 per ounce.   Yesterday’s AM fix was USD 1,412.25, EUR 1,094.51 and GBP 926.67 per ounce. 


Cross Currency Table – (Bloomberg)

Gold fell $32.70 or -2.29% yesterday to $1,392.70/oz and silver slid to $22.50 and finished - 3.55%. 

There are no surprises in the latest World Gold Council Gold Demand Trends report other than the fact that statistics show global demand for gold in Q1 2013 was on the increase before the COMEX raid on April 15. This is a clear indication that the fundamentals supporting a strong price for gold in the long term remain and also helps to explain why there was such a shortage of gold bars and coins in the weeks after April 15.


Gold in USD, 16 May 2013 – (Bloomberg)

The statistics speak for themselves: 

1. Jewelry demand was up 12% year-on-year; China returned a 19% increase on the same period last year, India and Middle East at 15%, and interestingly the US at 6%, its first increase since 2005.

2. Demand for gold bars and coins were up in all markets; 22% year-on-year in China and 52% in India and 43% in the US.

3. Central Banks continued their gold purchasing program for the seventh consecutive quarter purchasing over 100 tons. The sector accounted for 11% of demand worth $5.7bn with volumes concentrated in emerging markets.

4. Though it was 4% down the previous year, demand in the technology sector once again surpassed 100t for the quarter demand in Q1 2013.

Marcus Grubb, Managing Director of Investments at the World Gold Council commented: “The price drop in April, fuelled by non-physical moves in the market, proved to be the catalyst for a surge of buying that has left many retailers short of stock and refineries introducing waiting lists for deliveries. Putting this into context, sales of bars and coins, jewellery and consumption in the technology sector still make up 81% of the market.

Grubb added: “What these figures show is that even before the events of April, the fundamentals of the gold market remain robust with; growing demand in India and China, central banks consistently adding gold to their reserves and strong buying of investment products such as gold bars and coins.”

Key gold demand and supply statistics for Q1 2013

  • First quarter gold demand of 963t was down 13% compared with Q1 2012.
  • The value measure of gold demand in Q1 2013 was US$51bn, down 16% on the year before.
  • The Q1 2013 average gold price was US$1,632 down 3% on the year before.
  • The net outflow from ETFs was 177t in the quarter. That fall pushed the sum of ETF and total bar and coin demand to just below 201t. Total investment demand was 320t in Q1 2013, flat compared with a year ago.
  • Demand in the jewellery sector was up 12% to 551t. Jewellery demand in China was 185t while demand in India was 160t.
  • Demand in the technology sector once again surpassed 100t for the quarter.  Demand in Q1 2013 was 102t, down 4% on the previous year.
  • The Q1 2013 total mine production was up 4% on last year at 688t. Recycling fell 4% resulting in a total supply that is 1% higher than a year ago.
  • Net central bank purchases totalled 109t, 5% lower than a year ago, making this the ninth consecutive quarter in which central banks have been net purchasers of gold.

G4 Gold in USD, 5 Year – (Bloomberg)

The current gold price continues to appeal to investors and demand for all types of gold remains robust. There is no doubt that the next World Gold Council Gold Demand Trends report will surpass all the key benchmarks set above. Buying records will continue to tumble which augurs well for the long term price of gold.

About the Author
Mark O'Byrne

Mark O'Byrne is executive director of Ireland-based GoldCore.

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