JEDDAH – Despite a strong resurgence in demand for gold jewelry, bars and coins in the first quarter of this year, overall demand, however, was down 13 percent, the World Gold Council (WGC) said in its latest “Gold Demand Trends” report for the first quarter of 2013. Outflows from ETFs accounted for the bulk of this decline, it said. Excluding these outflows overall demand grew year-on-year, the report added. Global first quarter gold demand of 963.0 tons was valued at $50.5 billion. Total jewelry demand was up 12 percent year-on-year in Q1 2013, driven in the main by Asian markets. Jewelry demand in China was up 19 percent on the same period last year and stood at a record 185 tons. Demand in both India and the Middle East was up 15 percent respectively and in the US, demand showed a significant increase, 6 percent, for the first time since 2005. Demand for gold in China and India was also driven by an increase in bar and coin sales - up 22 percent year-on-year in China and 52 percent in India. In the US demand for bars and coins was up 43 percent compared with the same quarter in 2012. Globally, bar investment was up 8 percent while official coins (such as American Eagles and Canadian Maple Leafs) were up 18 percent. Gold held by gold-backed ETFs, which in 2012 accounted for 6 percent of the world's gold demand, fell by 177 tons. Central Banks remained significant acquirers of gold, making purchases in excess of 100 tons (109 tons) for the seventh consecutive quarter. India and China accounted for 62 percent of Q1 global jewelry demand, generating year-on-year growth of 15 percent and 19 percent respectively, out of the total global jewelry demand of 551 tons worth $28.9 billion. ETF outflows in the period reached 176.9 tons, equating to a 7 percent decline in total gold ETF holdings, which obscured the strong rise in investment for gold bars and coins at the retail level, the report noted. Chinese demand in gold bars and coins grew to 109.5 tons, and more than double the five-year quarterly average of 43.8 tons. However, demand for gold in the technology sector declined by 4 percent year-on-year to 102.0 tons. In value terms, demand was 7 percent lower at $5.4 billion. The sector contracted on further losses in bonding wire and continued erosion of dental demand. The report further showed that central banks added 109.2 tons of gold to their reserves in Q1 2013, the ninth consecutive quarter of net purchases. The sector accounted for 11 percent of demand in the first quarter, worth a value of $5.7 billion. At 1,051.6 tons, total gold supply was little changed in the first quarter. Mine production in Q1 2013 generated 688 tons of supply, 4 percent more than Q1 2012. Marcus Grubb, Managing Director, Investment at the World Gold Council, said: “The price drop in April, fueled by non-physical moves in the market, proved to be the catalyst for a surge of buying that has left many retailers short of stock and refineries introducing waiting lists for deliveries. Putting this into context, sales of bars and coins, jewelry and consumption in the technology sector still make up 81 percent of the market.” Moreover, he said “what these figures show is that even before the events of April, the fundamentals of the gold market remain robust with; growing demand in India and China, central banks consistently adding gold to their reserves and strong buying of investment products such as gold bars and coins.” — SG
