According to a recent report by the World Gold Council, global gold demand remained
stable in Q1 2015. However, there were significant variations across segments
and geographies which demonstrates the multi-faced nature of gold market.
Please find below some of the key highlights:
Global Market in Balance: The global gold market was in balance for the first three months
of 2015 as the top line demand was broadly neutral – down by negligible 1%
(YoY).
Variations across Sectors and Geographies: Though conditions varied across geographies and sectors, on
aggregate, these differences cancelled out. Weakness in jewellery and other
segments were balanced by strength elsewhere (Investments). Similarly, higher
volumes in India, Germany and South East Asian economies made up for declines
in China, Thailand, Turkey and Russia.
A positive divergence was
observed across various categories of investment demand. ETF flows were
positive for the first time since Q4 2012 because of improved western
investors’ sentiments towards gold. U.S listed products were main beneficiaries
but German and UK ETFs too witnessed inflows.
Conversely, investments in
bar and coin witnessed a decline, though it is still above pre-crisis levels
(between 2005-07 it averaged just 100 tonnes as against more than 200 tonnes
now). It came under pressure because of high gold prices (that led to profit
booking in Turkey), and because rallying stock markets in two largest consumers
of gold China and India (who make up 50% of consumer demand) forced domestic consumers
to reappraise their gold buying intentions.
Gold Investment Demand in India at 6-year Low: The bull-run in Indian equity market has provided an attractive
alternative to gold investment and investors have taken advantage of a range of
better performing assets. Although bullion import has risen 28% (YoY) but it
has more to do with curbs and levy imposed on gold imports last year to rein in
ballooning current account deficit. The curbs have since been eased, thereby
pushing up the quantity of gold imported.
Turkish Demand Lowest Since 2009 as Record Price Induced Profit
Booking: The sharp decline in gold
demand in Turkey can be traced to dwindling macroeconomic conditions in last
two years that had resulted in sharp depreciation of lira. This, in turn, has
propelled the local price of gold to near-record levels (prices have climbed to
TL100/g during March), inducing profit booking but hurting consumer demand in
process.
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