Global gold demand declined by 10 per cent to 953 tonnes in the April-June quarter of 2017, due to significant slowdown in inflows into Exchange Traded Funds (ETFs), a World Gold Council (WGC) report said. The overall gold demand in the corresponding quarter of 2016 stood at 1,055.6 tonnes, WGC said in its latest Gold Demand Trends report. Investment demand fell 34 per cent to 297 tonnes as compared to 450 tonnes in the same period last year. The report said after record levels of inflows into ETFs in the first half (H1) of 2016, a significant slowdown in the sector was the predominant factor behind the fall in overall demand so far this year. During the second quarter, the central bank demand jumped by 20 per cent to 94 tonnes against 78 tonnes in the Q2 of 2016. In the first half of 2017, central bank purchases were down by 3 per cent at 177 tonnes. However, in the H1, bar and coins investment grew along side jewellery and technology demand, each making modest gains as compared to the same period last year, it said.
Global jewellery demand rose by 8 per cent to 481 tonnes, which was 447 tonnes in the same period last year, mainly driven by India. “Demand for H1 2017 was down 14 per cent compared to last year, but in some respects the market was in better shape. Last year’s growth was solely down to record ETF inflows, while consumer demand slumped,” WGC Head of Market Intelligence Alistair Hewitt said.
“So far this year, we have seen steady ETF inflows in Europe and the US, jewellery demand has recovered with good growth in India, while retail investment and technology demand is up too,” he said. There are a few things to watch out for in the rest of the year, like the inflation data out of the US looks soft and markets have pushed out their expectations for a rate rise, Hewitt said. “The monsoon is looking good in India, and provided the market adapts to the new Goods and Services Tax (GST), we may see a solid demand around Diwali. And as the next generation of smart phones gets rolled out, we may see good support for technology demand,” he added.
According to the report, total supply fell by 8 per cent to 1,066 tonnes in the April-June quarter as compared to 1,160.3 tonnes in the same period last year. This was largely led by a steep drop in recycling, which declined by 18 per cent to 280 tonnes. Mine production remained virtually flat, falling marginally by 3 tonnes to 791 tonnes, the report said. Recycling was also affected by the rapidly increasing global gold price in the first three quarters of 2016, along with a tax amnesty in Indonesia, which attracted consumers to liquidate their assets.