The latest World Gold Council Gold Demand Trends report, which covers the period January-March 2014, shows a return to the long-term quarterly average demand trends established over the past 5 years. Following an exceptional year in 2013 gold demand in Q1 2014 was 1,074 tonnes, almost unchanged compared to the same period in 2013 - a clear demonstration that the fundamentals of the gold market remain robust.
Global demand for jewellery, the most significant component of overall demand, totalled 571 tonnes in Q1 2014, a 3% rise on the same period last year, representing the strongest start to the year for jewellery since 2005. Most notably, there was a 10% rise in demand for jewellery in China, which became the largest global market for gold demand in 2013.
Overall investment demand for gold dipped slightly, to 282 tonnes in Q1 2014, compared with 288 tonnes in the same quarter last year. Demand for bars and coins was 283t in the quarter, a fall of 39% on the same time last year. This coincided with the first rise in the quarterly average gold price seen since Q4 2012. The fall was particularly noticeable in India, where investment in bars and coins dropped 54% to 45 tonnes. Factors including duty and restrictions on gold imports coupled with restrictions on the free movement of cash and other assets, such as gold in the run up to the election, had the effect of dampening down genuine purchases of gold using cash.
Marcus Grubb, Managing Director, Investment Strategy, at the World Gold Council, commented: "Following an exceptional year in 2013, Quarter 1 2014 signals a return to the long term average patterns of demand, holding steady at 1,074 tonnes. It is clear that the longer term underpinnings of the gold market – such as jewellery demand in Asia – remain firmly in place demonstrating the continuing resilience of the gold market and the unique nature of gold as an asset class, rebalancing to reflect demand."
In value terms, gold demand in Q1 2014 was $45bn, down 21% compared to Q1 2013. The average gold price of $1,293/oz was down 21% on the average Q1 2013 price.
Olga Patseva, Editor in Chief of the American Bureau, Rough&Polished
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