In its recent Gold Demand Trends, the World Gold Council noted that the demand for gold has increased 16 percent on y-o-y basis to $59.7 billion at the end of the first quarter this year. Although there has been an increase in demand in value terms, the volume of gold demand has dropped by 5 percent to 1,097.6 tonnes.
While the Council attributes the increased (in value) demand of gold to the rise in demand from China and central banks and inflows into exchange-traded funds (ETFs), the dip in (volume terms)was attributed to the import duty imposed in India and the rising gold prices. The rise in the average price of gold in the said three months was 22 percent to $1,690.57 an ounce.
The global demand for gold jewellery was up 14 percent to $28.3 billion. The volume of global gold jewellery demand dropped 6 percent to 519.8 tonnes. There was a mixed reaction – a drop witnessed by weaker demand from India and Middle Eastern markets and Europe, but a growth from markets like China, Russia and Egypt.
Chinese gold jewelry demand rose to 156.6 tonnes, and made up for 30 percent of the global jewellery demand. China scored as the largest jewelry market for the third consecutive quarter. India, which is usually the major gold consuming market, saw gold jewelry demand dropping 19 percent to 152.0 tonnes.
The global investment demand (which encompasses gold bars, coins and ETFs) rose 38 percent to $21.2 billion. It also increased in volume by 13 percent to 389.3 tonnes. Demand for gold used in the technology and industrial sectors declined 7 percent to 107.7 tonnes.
China’s investment demand was at 98.6 tonnes, or 13 percent higher than the first quarter of 2011. India’s investment demand was down by 46 percent to 55.6 tones.
According to WGC, India’s gold demand has remained affected due to the rising gold prices, the import duties on gold and the volatility in the rupee. The gold demand in India dropped 3 percent to $10.42 billion and in volume terms it decreased by 29 percent to 207.6 tonnes.
The Council predicts the growth in China will outdo that in the western markets and will become the largest source of demand for gold in 2012.
The said three months of this year saw demand for ETFs and similar products at 51.4 tonnes, or $2.8 billion. Gold supply increased 5 percent (on y-o-y basis) to 1,070.3 tonnes.