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RPT-Asian gold demand falls in Q1 but fund outflows dry up-WGC
May 20, 2014 / 9:52 AM / 3 years ago

RPT-Asian gold demand falls in Q1 but fund outflows dry up-WGC

(Repeats to add attribution to table)
    * China, India gold demand posts double-digit drop in Q1
    * Overall gold demand holds steady as ETF outflows ease
    * Jewellery consumption edges up 3 pct

    By Jan Harvey
    LONDON, May 20 (Reuters) - Gold demand in major consumers
China and India fell in the first quarter from the previous
year's record levels, the World Gold Council said on Tuesday,
though a drop in sales from bullion-backed investment funds kept
overall demand steady.
    Consumer gold demand in number one buyer China fell 18
percent to 263.2 tonnes, with Chinese demand for gold coins and
bars down 55 percent in the first quarter, offset only partially
by a 10 percent rise in jewellery offtake. 
    Indian consumer demand was down by just over a quarter to
190.3 tonnes, with gold jewellery consumption dropping 9 percent
and coin and bar buying down 54 percent. 
    Overall gold consumption in the first quarter held steady at
1,074.5 tonnes, however, as net outflows from bullion-backed
exchange-traded funds (ETFs), which last year reached record
levels, dried up.
    "In the first quarter of last year we saw quite a divergent
market -- we saw gold flowing out of ETFs, and as the price fell
you saw consumers around the world surge into the market and buy
a lot of gold," the World Gold Council's Alistair Hewitt, one of
the authors of the report, said.
    "What we've seen in Q1 2014 is a move away from those
extremes and the market is a bit more stable," he said. "While
we've seen coin and bar demand come down, we've seen ETF
outflows subside."
    Outflows from exchange-traded funds, which last year reached
176.5 tonnes in the first quarter of 2013, dwindled to just 0.2
tonnes in the same period of this year, helping to balance the
drop in Asian buying. 
    Overall coin and bar demand fell by just over a third to
282.5 tonnes, with the fall in Indian and Chinese consumption
accounting for 70 percent of that decline.  
    In the full year the WGC expects Chinese gold demand, which
reached a record 1,066 tonnes last year, to be between 1,000 and
1,100 tonnes, while it sees Indian gold demand at between
900-1,000 tonnes.
    
    INDIAN DEMAND HURT
    Indian demand has been hurt this year by government measures
to reduce a record current account deficit by hiking import
duties and tying import volumes to export. 
    Among other large consumers of physical gold, Turkey also
saw gold demand fall 42 percent to 27.2 tonnes, while U.S.
demand fell 13 percent to 33.1 tonnes, and demand in Thailand
fell 56 percent to 24.5 tonnes. 
    "Flows of gold from Western vaults to satisfy the needs of
Eastern consumers have slowed as global gold markets have slowly
returned to a more 'normal' state of affairs," the report said. 
    "This is evidenced by a decline in the elevated price
premiums seen throughout much of last year, notably in Shanghai
and Istanbul."  
    Jewellery demand, the biggest segment of consumption, which
tends to be price sensitive, rose 3 percent to 570.7 tonnes,
chiefly due to increased buying in China, Japan, and the United
Kingdom, the research showed.
    The average spot gold price in the first quarter was
21 percent lower year on year, at $1,292 an ounce.
    Meanwhile, central bank demand fell 6 percent to 122.4
tonnes, although the official sector -- once a heavy seller of
gold -- remained a net buyer for a 13th straight quarter.
    
  GOLD DEMAND (T)
                           Q1 2014    Q1 2013  % change
 Jewellery                   570.7      554.7        +3
 Technology                     99      103.5        -4
                                               
 Investment                  282.3      288.1        -2
     - Bars and coins        282.5      464.7       -39
     - ETFs                   -0.2     -176.5         -
 Central bank demand         122.4      130.8        -6
                                               
                                                       
                TOTAL     1,074.50    1.077.2         0
 
    Source:  World Gold Council, Gold Demand Trends, Q1 2014;
GFMS, Thomson Reuters

 (Reporting by Jan Harvey; Editing by Susan Thomas)

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