Gold demand up 15 % on stable prices, rising offtake

06 May, 2017, 02:59 | Author: Valerie Burke
  • India continues to pull sluggish global gold demand higher

Gold prices in India have been at a premium over the last couple of weeks due to stronger demand for the annual Hindu and Jain holy festival of Akshaya Tritiya and the recent dip in global rates have further boosted the appetite."The price correction is attracting retail buyers".

Flows into ETFs stood at 109.1 tonnes, a third of the 342.1 tonnes in the first quarter of last year, which reflects the unusual strength of inflows of last year rather than weakness in the first quarter of this year.

The global demand for gold fell by 18% to 1,034 tonnes during the January-March period of 2017, primarily due to fewer inflows into the exchange-traded funds (ETFs) and slow central bank demand, as per the World Gold Council (WGC).

In tonnage terms, demand in the period was down 228.3 t, tumbling from 1 262.8 t in the first quarter of last year to 1 034.5 t in the corresponding period of this year.

Central bank demand has continued to slow, however, down 27 per cent to 76 tonnes, contributing to the overall decline. Wedding demand that accounts for 40-50% of jewellery and bars and coins demand was strong in Q1. "Comfortable pricing of gold has also been a major positive factor for incremental business during these sale seasons", said Abdullah. Russian Federation and Kazakhstan are expected to remain buyers of gold.

Jewellery demand in Iran jumped 27 per cent year-on-year to a four-year high of 12.9 tonnes, helped by an improving economy.

This will not have an immediate impact on the price of gold, but it will support investment sentiment, Hewitt said.

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A focus on capital outflows may have been weighing on the Chinese central bank's interest in gold, the WGC's head of market intelligence Alistair Hewitt said.

Interestingly, higher demand in India was the prime reason for the overall jewellery demand gaining marginally at 481 tonnes. Bar and coin investment, however, was healthy at 289.8t ( 9% y-o-y), while demand firmed slightly in both the jewellery and technology sectors.

Gold demand was up 15 per cent in the quarter ended March, at 123 tonnes, against 107 tonnes logged in the same period previous year, largely due to stable prices and a lower base. In the year-ago quarter the demand was 1,262 tonnes. "However, the demand continues to be relatively low in historical context, 18% below the quarterly average of five years", the report said.

The World Gold Council has predicted a demand of 650-750 tonnes in India in 2017.

There was also a 21 per cent fall in recycling to 283 tonne from 360 tonne during Q1 previous year.

Mine production of 764 t in the same period was little changed from 768 t in the corresponding three months of previous year.

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