Global Demand for Gold Jewelry +3% in Q1 2014

(IDEX Online News) – Global demand for gold for the jewelry industry was up 3 percent in the first quarter of 2014, totaling 571 tons. The World Gold Council (WGC) said this was the strongest start to a year for jewelry since 2005.

Demand for jewelry increased 10 percent in China to reach 571 tons. Last year, China became the largest global market for gold jewelry. This is juxtaposed with India, a traditionally strong jewelry consuming market, which saw demand fall 9 percent to 146 tons.

India also saw a 54-percent drop in the demand for bars and coins for investment, down to 45 tons. This decline was hardly surprising given the 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 recent election.

Overall, gold demand in the first quarter was 1,074 tons, which was almost unchanged compared to the same period in 2013. The WGC said this was a clear demonstration that the fundamentals of the gold market remain robust.

Consumer demand – at 853 tons – was lower than 2013. Last year, buyers took advantage of the lower gold price and drove consumer demand to record levels. However, the WGC said the first quarter’s results indicates a return to long-term average demand trends and is in line with the five-year quarterly average of 850 tons.

“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 tons,” said Marcus Grubb, managing director, Investment Strategy, at the WGC. “It is clear that the longer term underpinnings of the gold market – such as jewelry 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."

During the quarter, mine production was up 6 percent compared to last year, totaling 721 tons. Recycling, however, fell 13 percent, resulting in a total gold supply that was just 1 percent higher than a year ago at 1,048 tons

In value terms, gold demand in the quarter was $45 billion, down 21 percent compared to the first quarter of 2013. The average gold price of $1,293/oz was down 21 percent over 2013.