The demand for gold jewelry, bars and coins rose sharply in the first quarter of 2013. However, overall demand was dented as investors fled ETFs, probably on concerns of a sharp drop in price, which undermined the confidence that gold is a good long-term investment. The World Gold Council reported that overall demand for the precious metal fell 13% in the January to March period.
Among the detail released by the Council:
Global first quarter gold demand of 963.0 tonnes was valued at US$50.5bn. India and China accounted for 62% of Q1 global jewellery demand, generating year-on-year growth of 15% and 19% respectively.
Global jewellery demand of 551t was worth a record US$28.9bn, surpassing the previous quarter’s record. Q1 ETF outflows of 176.9t, equating to a 7% decline in total gold ETF holdings obscured the strong rise in investment for gold bars and coins at the retail level.
Chinese demand in gold bars and coins grew to 109.5t, and more than double the five-year quarterly average of 43.8t.
Demand for gold in the technology sector declined by 4% year-on-year to 102.0t. In value terms, demand was 7% lower at US$5.4bn. The sector contracted on further losses in bonding wire and continued erosion of dental demand.
Central banks added 109.2t of gold to their reserves in Q1 2013, the ninth consecutive quarter of net purchases. The sector accounted for 11% of demand in the first quarter, worth a value of US$5.7bn.
At 1,051.6t, total gold supply was little changed in the first quarter. Mine production in Q1 2013 generated 688.0t of supply, 4% more than Q1 2012.
The central bank data should come as no surprise. An earlier analysis of 2012 central bank activity by 24/7 Wall St. showed that:
Central bank buying for 2012 rose by 17% over 2011 to some 534.6 tonnes. As far as central bank gold buying, this was the highest level since 1964. Central bank purchases stood at 145 tonnes in the fourth quarter. That is up 9% from the fourth quarter of 2011, and the eighth consecutive quarter in which central banks were net purchasers of gold.
The World Gold Council provided an in depth look at the trends: