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Global Gold Demand -14% at $58B in 3Q

Nov 15, 2012 2:30 AM   By Dilipp S Nag
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RAPAPORT... The value of global gold demand fell 14 percent year on year to $57.61 billion in the third ‎quarter of 2012 reflecting a challenging global economic climate, according to the World ‎Gold Council (WGC).‎

WGC published its quarterly ''Gold Demand Trends'' report on Thursday showing that ‎demand in terms of volume declined 11 percent to 1,084.6 tons during the period. The average ‎price of gold was $1,652 per ounce during the quarter, down 3 percent from the average ‎for the same period one year ago.‎

The report noted that global gold jewelry demand declined 5 percent to $23.84 billion as ‎the volume of jewelry demand fell 2 percent to 448.8 tons. WGC added that the ongoing economic slowdown in ‎China dampened jewelry demand there.

Gold investment demand,  including gold bars, coins and exchange traded funds (ETFs),  decreased by 18 ‎percent to $22.83 billion, while volume fell 16 percent to 429.9 tons. Demand for ‎ETFs and similar investment products, however, rose by 56 percent to 136 tons ‎during the quarter. Demand for gold used in the technology and industrial sectors fell 9 ‎percent to $5.75 billion, while volume decreased by 6 percent to 108.2 tons.‎

WGC stated that jewelry demand from China, which is the second largest market and includes Hong Kong and Taiwan, fell 8 ‎percent to $6.94 billion due to a decline in purchases of 18-karat pieces and a notable ‎slowdown in the expansion of retail stores, as stock-building was reduced. Investment ‎demand in China declined 15 percent to $2.89 billion. The negative sentiment surrounding ‎China's slowing economy impacted consumer sentiment and business.‎

However, the Indian market showed signs of recovery as both jewelry and investment ‎demand increased during the quarter. The report noted that India’s jewelry demand rose ‎‎4 percent to $7.23 billion, while investment ‎demand increased 8 percent to $4.62 ‎billion. ‎India remains the largest gold jewelry market.‎

WGC explained that the late revival of the monsoon in India and restocking by traders and ‎jewelers ahead of the festive and wedding season could be the key reasons for the ‎upward trend in demand during the quarter. Indian consumers also seem to have ‎adjusted to the rise in gold price levels, it noted.‎

‎“After a slow start to the first half of 2012, the third quarter witnessed a gradual pick up in ‎gold demand in India head of the festive and wedding season that falls in the fourth ‎quarter,” said Marcus Grubb, the managing director of investment at WGC. “Against the ‎backdrop of a slowing economy and persistent inflation, this upward trend encouraged by ‎India’s socio-cultural affinity and gold’s significance as an effective store of wealth is ‎likely to continue through the end of 2012.”‎

Central banks remained net purchasers of gold but to a lesser degree than in the third ‎quarter of 2011. Global bank demand of 97.6 tons worth $5.2 billion accounted for 9 percent of ‎overall gold demand during the period.‎

WGC explained that gold demand remains resilient as demand in the third quarter of ‎‎2012 was above the five year quarterly average of 984.7 tons. “Against a backdrop of ‎continued global economic uncertainty and elections in China and the U.S., it is clear ‎from five year rising demand trends that gold’s fundamental property as a vehicle for ‎capital preservation continues to endure, as evidenced by this quarter’s increase in global ‎ETF investment, up 56 percent and continued purchasing by central banks, the ultimate ‎long term investors,” Grubb said.‎

Total gold supply during the quarter declined by 2 percent to 1,188.3 tons due to lower ‎mine production and reduction in recycling activity, the report noted.‎
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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, wedding, WGC, World Gold Council
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