JOHANNESBURG (miningweekly.com) – Physical demand for gold was expected to support the market during the first half of 2014, the latest Gold Survey 2013 update by Thomson Reuters GFMS revealed on Thursday.
Following the end of a 12-year bull run in 2013, the next year was set to be “the year of consolidation” for gold with the price drivers continuing to adjust on the back of concerns over the health and stability of the global financial systems.
Physical gold demand, however, for jewellery, bars, coins and industrial-use products were expected to support average prices above the $1 200/oz level during 2014.
“We are currently forecasting first-half 2014 physical bar demand to reach 560 t, up by almost 50 t compared with the second half 2013 level, albeit on a significantly lower year-on-year basis,” the survey said.
However, the report pointed out that the surge in volume levels recorded after the sharp price corrections in the first half of 2013 would be difficult to sustain.
Emerging market demand led a 33% rise in world gold bar investment.
The US market witnessed a turbulent year during 2013 and Europe net bar investment fell by 7% year-on-year; however, India’s investment surged 29% to 266 t, only to be overtaken by China with a 47% jump reaching a new record level of 366 t.
Further, while jewellery fabrication in the first half of 2014 was forecast to fall 16% year-on-year, compared with the “exceptionally high” 1 175 t recorded during the corresponding period last year, the lower price environment and an improving economic outlook should result in solid gains in the jewellery sector in the year ahead.
Jewellery fabrication jumped 13% to a five-year high of 2 198 t as China surpassed India to become the world’s largest consumer of gold jewellery.
The 31% surge in Chinese demand to 724 t, which was the largest percentage rise since 1992, was owing to Chinese New Year sales coinciding with a period of easing gold prices and expectations that prices would return to elevated levels
Jewellery demand in India posted a double-digit percentage increase in the first half of the year, but weaker domestic demand and government curbs on imports in the second half of the year resulted in a broadly flat outcome of 613 t for 2013.
Jewellery fabrication in the Middle East increased 13%, while a declining price trend and modest economic recovery saw US jewellery offtake recover strongly at 26% last year.
Excluding China, global jewellery demand remained subdued at 5.6% growth.