Q3 Gold Jewelry Demand Softens 4% Over 2013

(IDEX Online News) – According to the latest figures from the World Gold Council (WGC) gold jewelry demand was down 4 percent in the third quarter of the year compared to the same period in 2013. The quarter saw a drop in demand to 534 tons, slightly higher than a quarterly average of 527.6 tons.

Overall demand for gold was down just two percent year-over-year to 929 tons.

Jewelry demand in India rose 60 percent to 183 tons, the second-highest third quarter on record for the country. The WGC said that while the increase is partly reflective of the weakness in the same quarter last year when the government introduced import curbs and raised import duties, it also demonstrates the resilience of the country's appetite for gold jewelry. Further, improved consumer confidence in both the domestic economy and the new government added to the positive sentiment, with strong levels of purchasing being seen in the build up to Diwali.

China, however, was a different story. Demand for gold jewelry was down a considerable 39 percent year-on-year to 147 tons. This was was broadly in line with both the third quarter of 2012 and the five-year quarterly average (of 148.2 tons and 154.9 tons respectively).

In the US and UK, jewelry demand was strong, “buoyed by ongoing economic recoveries.” US jewelry demand grew a respectable 4 percent to 34 tons, the highest third quarter since 2009. In the UK, jewelry demand saw its fifth consecutive quarter of year-on-year growth.

“The figures for India and China this quarter reinforce the need to understand the factors which underpinned an exceptional Q3 last year,” said Marcus Grubb, WGC managing director of Investment Strategy. “In 2013, India was impacted by import curbs and increased import duties imposed by the previous government, whereas exceptional buying in China during the same period shaped buying patterns in 2014.”

He added that the long-term sources of demand – jewelry, investment, central banks and technology remain robust and diverse. “With recycling at a seven year low and mine supply looking increasingly likely to be constrained in the future the outlook for physical gold demand remains strong," he said.

Total gold supply fell by 7 percent during the quarter. Mine production stabilized (up 1 percent to 812 tons), but recycling slowed considerably, reaching its lowest year to date levels since 2007 at 807 tons.