Gold demand for jewellery making rose 3% in Q1 2014 to 57 lt while total investment demand was 282 tons compared to 288 tons in the same quarter previous year, according to World Gold Council.
WGC report shows a return to the long-term quarterly average demand trends established over the past five years. Following an exceptional year in 2013 gold demand in Q1 2014 was 1,074 tonnes (t), almost unchanged compared to the same period in 2013 – a clear demonstration that the fundamentals of the gold market remain robust.
Demand for bars and coins was 283t in the quarter, a fall of 39% on the same time last year. This coincided with the first rise in the quarterly average gold price seen since Q4 2012. The fall was particularly noticeable in India, where investment in bars and coins dropped 54% to 45t. Factors including duty and restrictions on gold imports coupled with restrictions on the free movement of cash and other assets, such as gold in the run up to the election, had the effect of dampening down genuine purchases of gold using cash. However in contrast, outflows from gold-backed Exchange Traded Funds (ETFs) slowed to just 0.2t, compared to the more substantial fall of 177t seen in Q1 2013.
Consumer demand of 853t was unsurprisingly lower than the figures seen throughout much of 2013, when buyers took advantage of the lower gold price and drove consumer demand to record levels. Q1 2014 data indicates a return to long term average demand trends and is in line with the 5-year quarterly average of 850t.
Following an exceptional year in 2013, Quarter 1 2014 signals a return to the long term average patterns of demand, holding steady at 1,074 tonnes. It is clear that the longer term underpinnings of the gold market – such as jewellery demand in Asia – remain firmly in place demonstrating the continuing resilience of the gold market and the unique nature of gold as an asset class, rebalancing to reflect demand.