China Gold Ownership Surges, Central Bank Holdings Still Huge

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The World Gold Council (WGC) released its gold demand and gold holding report for 2013. Demand for gold jewelry surged and purchases by central banks and exchange traded funds (ETFs) tapered off. The most notable data from the analysis is that gold demand in China surged to record levels. Much of the demand was based on a drop in gold prices.

The WGC analysts reported:

Demand for gold in China set a remarkable new record of 1,065.8t (tonnes), exceeding our expectations for the year.

And:

The impact on the Chinese gold industry of the extraordinary growth in 2013 demand has been marked, with significant growth in both manufacturing and retail network capacity.

Global demand was driven to a large extent by consumers:

Consumers put on an impressive show of strength last year, generating a 21% increase in demand for jewellery, small bars and coins (collectively referred to as ‘consumer demand’) to a historic high of 3,863.5 tonnes.

National banks remained among the largest holders of gold worldwide:

Central banks made net purchases of 368.6 tonne of gold in 2013, adding a further 61t in Q4 — the twelfth consecutive quarter of net central bank demand. The pace of purchases slowed towards the end of the year due to the heightened volatility of gold and a slower rate of foreign reserve accumulation. The annual total is in line with our widely discussed expectations and, although 32% lower than the previous year, is a healthy outcome — particularly in light of 2012 being the highest level of demand for almost 50 years.

U.S. central bank holdings, first among all countries, were 8.2 million tonnes at the end of last year. This was followed by Germany at 3.4 million tonnes, the International Monetary Fund at 2.8 million, Italy at 2.4 million, France at 2.4 million, China at 1.1 million, Switzerland and Russia at 1 billion each and the Netherlands at 0.6 million.

The last large category of gold use is for technology:

The volume of gold used in technology stabilised in 2013, at 404.8t and 407.5t in 2012, as the sector benefitted from a more buoyant global economic outlook and lower gold prices.

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