According to data compiled by GFMS analysts at Thomson Reuters, global gold consumption witnessed decline of 9% during the quarter ending March this year. The quarterly report also indicates that demand for gold in India witnessed a drop of 5.68% when matched with the same quarter a year ago.
GFMS report suggests huge drop in demand for gold jewelery, coins and bars in China during the quarter, which resulted in 9% fall in gold consumption worldwide. Chinese jewelery demand tumbled nearly 12% during the initial three-month period of the year. The investment demand in gold coins and bars dropped nearly 10% to 56 tons during the quarter.
Elsewhere in the world, Indian gold jewelery demand reported marginal growth of 2% during the quarter. Investment demand plunged to its lowest levels in five years, plunging 31% over the year. The agency forecasts gold consumption to recover from second quarter onwards. The country is likely to report another stellar year of gold sales. According to GFMS estimates, the country’s gold imports are believed to have jumped higher significantly during the quarter.
Also, gold jewellery consumption reported declines in other key markets including Turkey, North America and the Middle East. The physical demand for gold in the US too plunged to its weakest level since 2007, dropping by almost 6%.
Historically, China posts heavy buying activity during the first quarter of every year on account of increased purchases during Lunar New Year festive season. However, better returns from stock markets blocked the flow of capital into gold market. As a result, gold buying activity remained subdued during Q1 this year.
The worldwide gold consumption during Q1 2015 dropped 9% to 990 tons. Global investment demand for coins and bars fell by 17% during this period, GFMS report noted. Also, physical gold purchases by central banks worldwide dropped nearly 27% from 124 tons in Q1 2014 to as low as 90 tons in January to March this year.