Global gold market remains steady in Q1 2015 demonstrating the unique diversity of gold demand

The first three months of 2015 saw stable gold demand, according to the latest Gold Demands Trends report from the World Gold Council. Total demand for Q1 2015 was 1,079 tonnes (t), down just 1% on the same period last year. 

Conditions differed from market to market, but at an aggregate level, these differences broadly balanced each other out. Once again, consumers in Eastern countries dominated the market with China and India alone accounting for 54% of total global consumer demand in the quarter.

Global demand for jewellery, still the most significant component of overall demand, totalled 601t in Q1 2015, 3% lower than the 620t recorded in the same quarter last year. There were pockets of strength across a number of South East Asian countries – including Malaysia, Indonesia, South Korea, Thailand and Vietnam. In addition, jewellery demand in India was up 22% to 151t whilst the US saw further steady growth, up 4%. This was counterbalanced by declines in Turkey, Russia and the Middle East and in China, jewellery demand dropped 10% to 213t, as a rising stock market diverted money into equities, but it was still up 27% against the five-year average.

Investment demand, the other key driver of the world’s gold market, rose 4% to 279t in Q1 2015, up from 268t in Q1 2014. There were net inflows of 26t into gold-backed Exchange Traded Funds (ETFs) - turning positive for the first time since Q4 2012 as western investor sentiment returned to gold. Investment in bars and coins came under pressure in the face of buoyant stock markets, notably in India and China, and currency fluctuations in Turkey and Japan, but this was offset by strong retail investor demand in the euro zone up 16% to 61t, most notably in Germany and Switzerland.

Central banks continued to be strong buyers, purchasing 119t in the quarter, the same volume as in Q1 2014. This was the 17^th consecutive quarter that central banks have been net purchasers of gold as they continue to seek diversification away from the US dollar.

Total supply remained virtually unchanged at 1,089t as a 2% rise in Q1 2015 mine production to 729t was balanced by a 3% fall in recycling to 355t, compared with the same quarter last year.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, said:

 “The global gold market’s ecosystem functioned healthily during the first three months of 2015 illustrating the unique nature of gold and its ability to rebalance across sectors and geographies. This broadly stable global picture belies regional and sector differences which include: a 10% drop in jewellery demand in China, a 22% uptick in jewellery demand in India and the first net inflows to gold ETFs since 2012, reflecting gold’s resilience and ability to  respond to different cues in different ways. Once again, consumers in Eastern countries dominated the market with China and India alone accounting for 54% of total global consumer demand in the quarter”

In value terms, gold demand in Q1 2015 was US$42bn, down 7% compared to Q1 2014. The average gold price of US$1,218.5/oz was down 6% on the average Q1 2014 price.

The key findings from the report are as follows:

• Total global jewellery demand was 601t in the first quarter, a fall of 3% on the same quarter last year. These overall figures mask significantly different local trends: In India, jewellery demand was 151t, 22% higher than the same period last year albeit from a very low base. Demand was also 4% higher in both the US and the UK, at 22.4t and 4t respectively. In China, demand fell 10% to 213t against the same quarter in 2014, as slower economic growth and a buoyant stock market affected consumer purchases, but it exceeded its five-year quarterly average by 27%, lending weight to the view that the longer-term uptrend is comfortably intact
• Total investment demand was up 4% to 279t, compared to 268t in the same quarter the previous year. Demand for bars and coins fell 10% from the previous year to 253t as retail investors, notably in India, diverted their money into equities in the wake of the country’s strong stock market performance. However ETFs saw their first inflows since Q4 2012, albeit at the modest rate of 26t.
• Central bank net purchases were 119t in Q1 2015, unchanged on the same period in 2014 and the 17^th consecutive quarter in which central banks have been net purchasers as they diversify their assets.
• Total supply remained virtually unchanged at 1,089t as a 2% rise in Q1 2015 mine production to 729t was balanced by a 3% fall in recycling to 355t, compared with the same quarter last year

Gold demand and supply statistics for Q1 2015

• Q1 gold demand of 1,079t was 1% lower than the 1,090t seen in Q1 2014
• Total consumer demand – made up of jewellery demand and coin and bar demand – totalled 854t, a fall of 5% on the 902t seen in the same period last year
• Consumer demand in India rose 15% to 192t, while in China it declined 7% to 273t. Taken together, consumers in India and China alone now account for 54% of all consumer demand
• Demand in the technology sector was 80t for the quarter, down 2% compared to the previous year
• Gold demand in value terms in Q1 2014 was US$42bn, down 7% on last year

The Q1 2015 Gold Demand Trends report, which includes comprehensive data provided by Metals Focus, can be viewed at www.gold.org, and a video can be seen here.

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