1Q Gold Demand Hits Lowest Level In 10 Years - WGC
(Kitco News) - Gold demand is off to a slowstart in 2018, as first-quarter results from the World Gold Council (WGC)revealed the lowest level in 10 years.
Gold demand dropped 7% year-on-year in the first quarter to 973 tonnes - a level last seen inthe first quarter of 2008, the WGC said in its Gold Demand Trends report thatwas released on Thursday.
The WGC blamed poor gold-bardemand as well as disinterest in gold-backed exchange-traded funds (ETFs) forthe “quiet” start to the year.
“A subdued gold-price environmenthampered demand,” said the report. Data was provided to the WGC by theconsultancy Metals Focus.
Global investments into gold barsand coins dropped 15% to 254.9 tonnes, led by poor figures coming out of China,Germany and the U.S.
ETFs saw inflows of 32 tonnes inthe January-March period, down 66% from last year’s first quarter. The biggestmoves came from the North American-listed ETFs, but most gains were offset byEuropean- and Asian-listed funds.
Global jewelry demand was alsounimpressive, edging down 1%, with only 488 tonnes added in the first quarter.The sector was dragged down by Indian consumers feeling the pressure of highergold prices and a weakening rupee, with local demand down 12%.
But, the WGC noted that Chineseand American jewelry markets saw an improvement, with the latter reporting thehighest results in nine years.
Central Banks’ Gold Buying Spikes 42%
The bright spot in the report wascentral banks continuing their efforts to expand reserves. This time around,the banks added 116 tonnes, up 42% from the first quarter of 2017, thegold-focused organization reported.
“This was the highest Q1 totalfor four years and in line with average quarterly purchases since Q2 2010 of115 tonnes. Russia, Turkey and Kazakhstan again dominated the list of centralbanks buying gold, adding 91 tonnes between them,” the report stated.
Also, use of gold in thetechnology sector continued to improve, rising 4%, led by the wireless sector,which employed 3D sensors for facial recognition.
‘Stable’ Environment For Gold
Alistair Hewitt, the WGC’s headof market intelligence, described the overall environment for gold as “stable”during the first quarter.
“Although demand was downyear-on-year, we saw encouraging levels of jewelry demand in China, the U.S.and Europe, continued growth in the technology sector, and steady inflows intoETFs, albeit at a slower pace than last year. Solid inflows into central-bankreserves also highlight the ongoing relevance of gold as a strategic asset forinstitutional investors,” Hewitt said in a press release.
The supply side of the equationadvanced to 1,064 tonnes in the first quarter, up 3% on increased mineproduction. “Mine production and recycling levels both saw fractional increasescompared with Q1 2017, at 770 tonnes and 288 tonnes respectively,” the reportspecified.
By Anna GolubovaFor Kitco News
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