I’ntl gold demand fell 16% in April-June: WGC

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Mumbai, Aug 16: Global gold demand fell 16% in the second quarter of the current calendar year as price swings discouraged purchases by jewellers, the biggest buyers of the precious metal, the producer-funded World Gold Council (WGC) said.

The global demand dropped to 801.6 metric tonne from 959.8 tonne a year earlier, the London-based World Gold Council said on Wednesday in a statement. That was the third straight quarterly decline, and the lowest level of demand since the third quarter of 2004. Jewellery demand fell 24% to 562.5 tonne, a three-year low.

Gold’s price swings in the quarter were the most for that period since 1982, according to Bloomberg data. The metal climbed to a 26-year high in New York on May 12, and then plunged by one-quarter a month later. Buyers from India, the world’s biggest user, cut purchases by 38%, Indian jewellery usage slumped 43%.

“If the price is moving around, people in India will be nervous and just won’t want to buy,” Jill Leyland, economic adviser to the Gold Council, said in an interview in London on Tuesday. “It doesn’t matter how high or low the price. The important thing is that it’s perceived to be stable.”

“A pickup in jewellery demand in the second half is ‘critical’ to sending gold prices higher for the whole year,” John Hill, an analyst with Citigroup Inc, had said in an August 9 report. Jewellers made up 85% of the consumer demand for gold in the second quarter.

Investment demand rose 19% over the period, helping to support a 47% rise in the price of gold, which averaged $631.19 an ounce in the second quarter. Exchange-traded funds (ETFs) backed by bullion bought 39.1 tonne of the metal, compared with net sales of 1.6 tonne a year earlier.

“Investors are interested in gold because they perceive the fundamentals as solid, with supply constrained and a solid amount of jewellery demand underneath,” Leyland said.

Gold supply fell 5% to 832 tonne as central bank sales dropped 63%. European Central Bank (ECB) sales may fall short of the 500-tonne limit for the year ending September 26, the council said in the statement.

China’s gold jewellery demand fell 2% to 54.5 tonne, exceeding US jewellery demand of 54.2 tonne to become the second-biggest jewellery market. Last year, the US market was No 2.