LONDON (Reuters) - Gold demand hit a five-year low last year as buying of jewellery, coins and bars failed to keep pace with 2013's elevated levels, particularly in major consumer China, the World Gold Council said on Thursday.
But the declining trend in demand, which has fallen every year since its 2011 peak, is likely to turn around in 2015, the WGC's managing director for investment, Marcus Grubb, said.
"In tonnage terms, we expect the market to come in somewhere between 4,100 tonnes and 4,200 tonnes in the full year (2015)," he said. "We see Indian demand rising, and I think you'll see a big improvement in China too."
The 2014 drop in demand was limited by slower liquidation of bullion-backed funds, an uptick in official sector demand, and a recovery in Indian gold jewellery buying.
World gold demand fell 4 percent to 3,924 tonnes last year, the lowest annual total since 2009, according to the WGC data, prepared in conjunction with GFMS analysts at Thomson Reuters.
"We expect to see 400 tonnes taken off the market by the central banks this year," Grubb said.
"Jewellery demand will also be a big driver in 2015, and if we see a stronger gold market, you will see an improvement in investment demand, which also means in the exchange-traded funds."
Global gold jewellery buying fell 10 percent last year, while Chinese jewellery demand fell 33 percent to 623.5 tonnes.
Overall investment rose 2 percent to 905 tonnes from 885 tonnes, chiefly due to a sharp reduction in selling from
gold-backed ETFs to 159 tonnes from 880 tonnes in 2013.
Demand for gold coins and bars dropped 40 percent, declining 50 percent in China, 23 percent in the Middle East, 46 percent in Turkey and 31 percent in the United States.
Indian demand for coins and bars also fell 50 percent, but its jewellery buying rose by 8 percent to a record 662 tonnes, largely due to strong festival- and wedding-related demand in the fourth quarter.
Easing consumer demand was offset by a 16 percent rise in central bank buying to 477 tonnes last year. The bulk of
acquisitions were in Russia, with Kazakhstan and Iraq also seen buying.
On the supply side of the market, gold mine output rose 2 percent to a record 3,114 tonnes, while gold recycling fell to a seven-year low as prices XAU= struggled to recover from 2013's sharp drop. Overall supply was little changed.
Reporting by Jan Harvey; Editing by Veronica Brown/Ruth; Pitchford