August 2, 2018 / 4:04 AM / a year ago

Gold demand in the first half was the lowest since 2009 -WGC

    * Global gold demand falls 4 pct in Q2 to 964.3 T
    * Buying of gold exchange-traded funds down 46 pct
    * Indian jewellery demand slides 8 pct

    By Peter Hobson
    LONDON, Aug 2 (Reuters) - Global demand for gold fell 6
percent in the first half of this year due mainly to a sharp
decline in purchases by exchange traded funds (ETFs), the World
Gold Council said in a report on Thursday.
    Total global demand for gold was 1,959.9 tonnes over
January-June, down from 2,086.5 tonnes in the same period last
year and the lowest first-half total since 2009, the
industry-funded WGC said in its latest Gold Demand Trends
    For the second quarter, demand was down 4 percent year on
year at 964.3 tonnes. Purchases of gold for investment fell 9
percent, driven by a 46 percent decline in ETF buying. 
    Central bank purchases dipped 7 percent over April-June and
a weak Indian market dragged use for jewellery, the biggest
source of demand, down 2 percent. 
    "It's been a soft start to the year and that's largely
because of lower investment demand," said Alistair Hewitt, the
WGC's head of market intelligence.     
    ETF investment was weakest in the United States, where a
strong economy gave little incentive to buy gold, traditionally
used as a safe place to store assets during political and
economic uncertainty. 
    But in Europe, demand was bolstered by the rise of
eurosceptic parties in Italian elections and uncertainty over
European Central Bank policy, Hewitt said. In China an
escalating trade dispute with Washington and falling stock
markets drove investment demand.
    "Towards the end of the second quarter we actually saw
outflows from U.S. listed funds," Hewitt said. "It really was
the European inflows that meant we saw modest global inflows
over the quarter."
    In Iran, meanwhile, sales of gold bars and coin surged 202
percent as the United States pulled out of a deal on the
country's nuclear programme. 
    Jewellery demand failed to gain from a 5.4 percent fall in
the price of gold over April-June because the currencies
of key consumers including China, India and Turkey weakened,
making dollar-priced gold more expensive for local buyers, the
WGC said.
    Jewellery consumption in India fell 8 percent in the second
quarter to 147.9 tonnes, in part because of the weaker rupee.
Demand in China was more resilient, rising 5 percent to 144.9
    On the other side of the market, increased mine production
and recycling helped lift overall supply by 3 percent to 1,120.2
tonnes in the second quarter.  
        GOLD DEMAND (T)*   
                      Q2 2018      Q2 2017     % change
 Jewellery                  510.3       519.4         -2%
 Technology                  83.3        81.5          2%
 Investment                 281.4       310.3         -9%
 - Bar and coin)            247.6       247.8          0%
 - ETFs and similar)         33.8        62.5        -46%
 Central banks               89.4        96.4         -7%
 TOTAL                      964.3     1,007.5         -4%
    * World Gold Council, Gold Demand Trends Q2 2018

 (Reporting by Peter Hobson
Editing by Alexandra Hudson)
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