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RAPAPORT... Global gold jewelry demand surged 20 percent year on year to $26.179 billion, according to the World Gold Council's quarterly report ''Gold Demand Trends.'' But while demand for the metal strengthened across the jewelry sector, the rate of gold purchased for technology purposes dropped 11 percent to $4.743 billion, it plunged 68 percent to $4.794 billion for investments and by 62 percent to $3.236 billion for central bank net purchases.
Demand for gold bars and coins leapt 56 percent to $23.091 billion, according to the report. Exchange-traded-funds and similar products recorded a net outflow of $18.297 billion. Overall, gold demand in the second quarter plummeted 23 percent to $38.952 billion. In terms of weight, gold demand fell 12 percent year on year to 856.3 tonnes, with demand for the jewelry sector up 37 percent to 575.5 tonnes.
Gold jewelry demand jumped 33 percent year on year to $8.6 billion in India and increased by 35 percent to $7.6 billion in Greater China during the second quarter. The value of gold jewelry demand slipped 12 percent to $205 million in Japan, declined 10 percent to $921 million in the U.S. and fell 25 percent to $324 million in Europe. But demand rose 17 percent to $2.5 billion in the Middle East. 
Authors of ''Gold Demand Trends'' opined that jewelry consumers were ''out in force'' during the second quarter as the demand by weight surged to such an extent that it far outweighed the decline in gold prices.
''The resultant buying frenzy caused a huge rise in regional premiums on gold, as supply chain bottlenecks caused delays in meeting demand. The upward trend was almost universal, with the most notable year-on-year improvements occurring in India, China, the Middle East and smaller Asian countries. The focus in most markets was on higher karat jewelry with its connotations as an investment proxy,'' the report noted.
But in terms of gold weight demand for jewelry, Europe was the only region to report a decline, while the U.S. delivered a second consecutive quarter of growth as lower jewelry price points were well received by shoppers, according to the report.
''Although demand was again healthiest at the high end of the U.S. market, there was also evidence of a slowdown in the shift to lower-karat items in the middle segment. Demand was augmented by growth at the wholesale level, with lower prices presenting a favorable opportunity to embark on early stock building in preparation for the seasonally strong fourth quarter,'' the report stated.
India and China accounted for almost 60 percent of the global jewelry sector and around half of total bar and coin demand in the quarter. The World Gold Council stated that growth was indicative of opportunistic buying, not only at the consumer level but also by the trade, which used the opportunity to bolster stocks.
Such trends among consumers were more surprising for China, authors noted, where the historical tendency had been to buy into a rising price trend, and is more remarkable for the fact that the second quarter is traditionally a seasonal low point for gold.
The World Gold Council expects a notable dampening of Indian demand over the coming months, more than would normally be expected during the usual third-quarter slowdown, as the market digests gold import regulations. ''Indications for the fourth quarter so far remain positive. In China, continued expansion of the domestic jewelry retail network and growth in production capacity has positive longer-term implications for jewelry demand, but the market faces possible shorter-term headwinds from a more material economic slowdown,'' the report stated.
Other trends in the report observed that Indonesia's demand for gold by weight was the strongest since 2009 and Turkish jewelry demand by value in local currency reached a record high. Growth across the Middle East was almost purely price-related and the World Gold Council stated that demand in Dubai was heavily buttressed by the substantial ex-pat Indian community.
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