According to the latest Gold Demand Trends report from the World Gold Council, covering the period July to September 2014, global demand for gold was down just 2% year on year to 929 tonnes (t).
Overall jewellery demand softened slightly down 4% to 534t, when compared with an exceptional quarter in 2013. Taking a slightly longer term view, Q3 2014 jewellery demand was marginally stronger than the quarterly average of 527.6t. Year to date volumes continue to extend the broad uptrend from the low seen in 2009.
Looking behind this overall number, in India, jewellery demand saw a 60% year on year increase to 183t in Q3 2014, the second highest Q3 on record for the country. While the increase is partly reflective of the weakness in Q3 in India last year - when the government introduced import curbs and raised import duties - it also demonstrates the resilience of the country’s appetite for gold jewellery. Improved consumer confidence in both the domestic economy and the new government added to the positive sentiment, with strong levels of purchasing being seen in the build up to Diwali.
In China jewellery demand for Q3 2014 was down 39% year on year to 147t, but was broadly in line with both Q3 2012 and the 5-year quarterly average (of 148.2t and 154.9t respectively). Whilst in the US and UK, jewellery demand was strong, buoyed by ongoing economic recoveries. US jewellery demand grew 4% year on year to 34t, the highest Q3 since 2009. UK jewellery demand had its fifth consecutive quarter of year on year growth.
Investment demand, a combination of bars and coins and exchange-traded funds (ETF), was up 6% to 204t. However, investment in bars and coins was down 21% to 246t. This reflects an adjustment towards more normal levels of demand after a surge of unprecedented consumer demand took place last year. ETF outflows stood at 84t for the year to date compared to 699t in the same period last year. Third quarter demand for bars and coins was very close to the 10-year quarterly average of 240.6t. It’s worth noting that before the financial crisis of 2008, the European bar and coin market was virtually non-existent.
Marcus Grubb, Managing Director of Investment Strategy at the World Gold Council said:
“This quarter the market continued to find its feet after an exceptional 2013, with China catching its breath and buying in the build up to Diwali driving Indian jewellery purchases. The figures for India and China this quarter reinforce the need to understand the factors which underpinned an exceptional Q3 last year. In 2013, India was impacted by import curbs and increased import duties imposed by the previous government, whereas exceptional buying in China during the same period shaped buying patterns in 2014.
The long-term sources of demand - jewellery, investment, central banks and technology remain robust and diverse. People around the world buy gold for different reasons at different times, reinforcing the unique self balancing nature of the gold market. With recycling at a seven year low and mine supply looking increasingly likely to be constrained in the future the outlook for physical gold demand remains strong.”
Central banks bought 93t of gold in Q3 2014, the 15th consecutive quarter that banks were net purchasers of gold. Year to date, central banks have bought 335t of gold compared to 324t in the same period last year. This was driven by a number of factors including a continued diversification away from the US dollar and the backdrop of ongoing geopolitical tensions.
Technology demand was 98t, 5% lower than a year ago as the industry continued its shift towards alternative materials in technological applications.
Total supply fell by 7% in Q3 2014, continuing the broad themes surrounding gold supply during the first half of the year. Mine production stabilised (up 1% to 812t) but recycling slowed considerably, reaching its lowest year to date levels since 2007 at 807t.
The key findings from the report are as follows:
- Jewellery remains the biggest component of gold demand, representing more than half of all demand at 534t, which is 4% lower year on year. Jewellery demand was driven by India, which increased 60% to 183t. UK and US demand was also strong. Chinese jewellery demand fell 39% to 147t as the jewellery market caught its breath after an exceptional year for demand last year.
- Central banks bought 93t of gold in Q3 2014, 9% lower year on year, but the 15th consecutive quarter that banks were net purchasers of gold.
- Investment demand (bars and coins and ETFs) was up 6% to 204t. However, there was a 21% fall in bar and coin demand from 312t to 246t following unprecedented levels of demand last year. ETF outflows stood at 41t compared to 120t in the same period last year.
- Technology demand was 98t, 5% lower than a year ago as the industry continued its shift towards alternative materials in technological applications.
- Total supply fell by 7% year on year to 1,048t. Mine production was up slightly 1% to 812t, but recycling of gold continued to abate, declining 25% year on year to 250t, and on a year to date basis is the lowest level since 2007.
Gold demand and supply statistics for Q3 2014
- Gold demand for Q3 2014 was 929t, down 2% year on year from 953t.
- Central bank purchases declined 9% year on year, to 93t from 101t.
- Total bar and coin demand fell by 21% year on year, to 246t from 312t.
- ETF outflows were 41t, compared to 120t in the same period last year.
- Total jewellery demand fell by 4% year on year, to 534t from 556t.
- Technology declined by 5% to 98t compared to 103t in Q3 2013.
- Total supply fell by 7% to 1,048t compared to 1,129t in the same period last year.
The Q3 2014 Gold Demand Trends report, which includes comprehensive data provided by GFMS, Thomson Reuters, can be viewed at http://www.gold.org/supply-and-demand/gold-demand-trends and a video can be seen here.
Ends
For further information please contact:
Melissa McVeigh
World Gold Council
T +44 207 826 4701
E [email protected]
Charlotte Paton
Edelman
T +44 (0) 203 047 2587
E [email protected]
Note to editors:
World Gold Council
The World Gold Council is the market development organisation for the gold industry. Working within the investment, jewellery and technology sectors, as well as engaging in government affairs, our purpose is to provide industry leadership, whilst stimulating and sustaining demand for gold.
We develop gold-backed solutions, services and markets, based on true market insight. As a result, we create structural shifts in demand for gold across key market sectors.
We provide insights into the international gold markets, helping people to better understand the wealth preservation qualities of gold and its role in meeting the social and environmental needs of society.
Based in the UK, with operations in India, the Far East, Europe and the US, the World Gold Council is an association whose members include the world’s leading and most forward thinking gold mining companies.
