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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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