Gold Demand Returning to Long-term Trends: World Gold Council

The World Gold Council released its latest Gold Demand Trends report, commenting that it “shows that global gold demand continues to demonstrate a return to long-term trends after an exceptional year in 2013.” The report covers April to June 2014.

Key report findings include:

  • Jewellery remains the biggest component of gold demand, representing more than half of all demand at 510t. Although it is down 30% year on year, jewellery has been extending the broad upward trend from the base established in early 2009.
  • Central banks increased purchasing by 28% to 118t compared with the same period last year, as they continued to use gold as a hedge against risk and diversify away from the US dollar.
  • Total investment demand (combined investment in bars and coins and ETFs) was up 4% to 235t. However, there was a 56% decrease in bar and coin demand from 628t in Q2 2013 to 275t in Q2 2014 following unprecedented levels of demand last year. ETF outflows were 40t, a tenth of the outflows seen in the same period last year
  • Taken together, these factors show that gold demand is reverting to  long term trends after an extraordinary 2013.
  • Total supply for the quarter was up 10% year on year solely due to the growth in mine supply.
  • H1 recycling is the lowest since 2007 although the figures for Q2 2014 are up 1% to 263t compared to last year – a relatively low figure compared to the historical average.

Marcus Grubb, managing director of investment strategy at the World Gold Council, commented:

In the context of an exceptional year last year where we saw record consumer buying and investor sell-offs, this quarter’s demand continues to demonstrate a return to long-term trends, illustrating the uniquely balanced nature of the gold market. Jewellery consumers continued to digest the exceptional purchases of 2013 and investors also rebalanced, pulling back from the extremes we saw last year. Overall the gold market is stabilising following the extraordinary conditions we saw in 2013.

Click here to read the full World Gold Council report.