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Global Gold Demand Flat at $51B, Volume -7% in 2Q

Aug 16, 2012 3:04 AM   By Dilipp S Nag
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RAPAPORT... The  value of global gold demand remained relatively flat at $51.2 billion in the ‎second quarter of 2012, having totaled $51.6 billion during the same period of 2011, according to the World Gold Council (WGC), which just released its quarterly ''Gold Demand Trends'' report.‎

However, by volume, demand declined 7 percent year on year to 990 tons as the ‎challenging global economic climate took its toll on commodities. The average price of gold was ‎‎$1,609.48 per ounce during the quarter, which was 7 percent higher than the average achieved in ‎the second quarter of 2011.‎

‎“Gold’s performance reflects the continuing challenging economic climate,” said Marcus ‎Grubb, the managing director of investment at WGC. “A softness in India and China, who ‎between them represent over 45 percent of the total second- quarter jewelry and ‎investment demand accounts for much of the slowing of global gold demand.”‎

This quarter's  ''Gold Demand Trends'' report indicated that gold jewelry demand ‎declined 9 percent year on year to $21.65 billion as the volume  fell 15 percent to 418.3 tons. ‎Gold investment demand -- including gold bars, coins and ETFs -- decreased by 17 ‎percent to $15.63 billion, while volume fell 23 percent to 302 tons. Demand ‎for gold used in the technology and industrial sectors rose 1 percent to $5.81 billion but ‎declined 5 percent by volume to 112.2 tons.‎

The report noted that India’s gold jewelry demand fell 26 percent to $6.46 billion, thoughtthe ‎country still ranked as the largest gold jewelry market during the quarter. India’s investment ‎demand dropped 47 percent to $2.94 billion. ‎

WGC explained that the declines were partly a reflection of the strength of ‎demand in 2011, as well as being  influenced by Indian investors taking advantage of the weak ‎rupee against the U.S. dollar. The fluctuations in the exchange rate and the rise in the ‎price of gold to  record highs of approximately  INR 30,000 per 10 grams in June were compounded by ‎domestic inflation and concerns over a weak monsoon season, it added.‎

Gold jewelry demand from China, including Hong Kong and Taiwan, fell 2 percent to $5.33 billion, while investment demand there ‎rose 3 percent to $2.75 billion. Investors restrained buying due to volatility in the gold price, while the lack of sustained upward momentum in the gold ‎price and the slowdown in domestic gross domestic product (GDP) also discouraged ‎consumers from buying gold jewelry, WGC explained.‎

WGC stated that the ongoing sovereign debt crisis in the Eurozone underpinned ‎European investors’ enduring conviction in gold’s capital preservation properties. ‎

The report also noted that demand from the official sector reached a record high ‎during the quarter, accounting for 16 percent of overall global demand by volume. ‎Central banks that bolstered their holdings during the period included the National Bank of ‎Kazakhstan, and the central banks of the Philippines, Russia and Ukraine.‎

Grubb noted that despite all the uncertainty, gold’s fundamental properties as a vehicle ‎for capital preservation and a source of liquidity continue to endure, which was evident in ‎the activity of the central banks.‎

Total gold supply during the quarter declined by 6 percent year on year to 1,059.1 tons ‎primarily due to a reduction in recycling activity, the report concluded.‎
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Tags: Central banks, China, demand, Dilipp S Nag, etfs, Exchange-traded funds, gold, Gold demand, India, Investment Demand, Jewelry, Jewelry demand, Marcus Grubb, Rapaport, supply, WGC, World Gold Council
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