Gold demand down 12 per cent in Q2

Natalie Ceeney 02

Demand for gold fell to 856 tonnes in the second quarter, a 12 per cent decrease compared with a year ago, according to the World Gold Council.

Additionally, gold held within exchange traded funds fell by 402 tonnes after investors fled the commodity during the three-month period. ETFs accounted for 6 per cent of the world’s gold demand in 2012.

The yellow metal has suffered in the past few months, with its price falling to $1,191.21 an ounce in June – its lowest price since August 2010 and marking the worst quarter for gold since at least 1968. Since then it has firmed to $1,339.2.

Demand for gold fell as a result of Federal Reserve chairman Ben Bernanke’s talk of possibly tapering the US quantitative easing programme – and in the ensuing volatility gold exchange traded products suffered net outflows of $18.5bn over a three-month period ending in July 2013. 

In terms of the demand market of gold, central bankers were net buyer in the second quarter with purchases of 71 tonnes. This is a continued trend, starting in the first quarter of 2011 and now in its 10th consecutive quarter.

Though overall gold demand was down, China and India continued to be the biggest market for gold – up 54 per cent and 51 per cent respectively a year on.

World Gold Council managing director of investment Marcus Grubb says: “The second quarter continued the trend that we saw in the first, of a rebalancing in the market, as gold coming onto the market from ETF sales met with a wave of demand for bars and coins, as well as jewellery.

“This shift from west to east has been further reinforced by recent data from the [London Bullion Market Association] showing that in June the volume of gold transferred between accounts held by bullion clearers hit a second consecutive 12-year high, buoyed by strong Asian physical demand.”