JOHANNESBURG (miningweekly.com) – Demand for gold jewellery rose 12% in the first quarter of this year, the World Gold Council (WGC) said on Thursday.

“Overall, the long-term appetite for investment remains strong, demonstrated by the continued demand for bars and coins,” WGC MD Marcus Grubb told Mining Weekly Online from London.

The WGC’s 'Gold Demand Trends' report for January to March showed a growing appetite for owning gold jewellery in India and China in particular.

The price drop in April, fuelled by nonphysical moves in the market, proved to be the catalyst for a surge of buying that had left many retailers short of stock and refineries introducing waiting lists for deliveries.

Sales of jewellery, and bars and coins, and consumption in the technology sector continued to make up 81% of the market.

“What these figures show is that even before the events of April, the fundamentals of the gold market remain robust; with growing demand in India and China, central banks consistently adding gold to their reserves and strong buying of investment products such as gold bars and coins,” Grubb added.

Jewellery demand in China was up 19% on the same period last year and stood at a record 185 t.
Demand in both India and the Middle East was up 15%, and in the US, demand showed a significant increase, 6%, for the first time since 2005.

Demand for gold in China, up 22%, and India, up 52%, was also driven by an increase in bar and coin sales.

In the US, demand for bars and coins rose 43% compared with the same quarter in 2012.

Globally, bar investment was up 8%, while official coins – such as the American Eagles and Canadian Maple Leafs – were up 18%.

Gold held by gold-backed exchange-traded funds (ETFs), which in 2012 accounted for 6% of the world’s gold demand, fell by 177 t.

Central banks remained significant acquirers of gold, making purchases of more than 100 t for the seventh consecutive quarter, compared with 109 t in the previous period.

Overall, total global demand for gold in Q1 2013 was 963 t, down 19% from the last quarter of 2012.

In value terms, first-quarter gold demand was $51-billion, down 23% compared to the last quarter of last year.

The average gold price of $1 632/oz was down 5% on the average 2012 fourth-quarter price, and down 3% on the same prior-year period.

Total first-quarter demand in China totalled 294 t, a rise of 20% on the same quarter last year, as the economy continued to pick up from the downturn experienced in the second half of 2012. Of that figure, jewellery demand in the quarter was a record 185 t, up 19% on last year, while bar and coin investment was 110 t, rising by 22% from last year.

The Indian market also demonstrated a continued appetite for gold, with total demand of 257 t being up 27% on the same quarter last year.

Retail investment was up 52% on the first quarter of last year, while jewellery was up 15%.

The latest quarter to March 31 was the seventh consecutive quarter in which central banks acquired more than 100 t of gold, and the ninth consecutive quarter in which central banks had been net purchasers.

ETFs saw a net outflow of 177 t in the quarter. By contrast there were strong inflows into other forms of investment, with bar and coin demand at 378 t being 10% higher than last year.

Grubb noted that gold-backed ETFs, which made up 6% of gold demand in 2012, saw mainly US holders collect profits and move into equities.

While gold ETF holdings were down, this had been balanced by 378 t of investment in bars and coins, an increase of 10% on the same period last year, and up 12% on the last quarter of 2012.