Global gold demand down 5% in Q12012

IRJ - May 21 - Global gold demand in the first quarter of the year was 1,097.6 tonnes (t), down 5 per cent year-on-year (yoy) on the back of Indian import taxes and high gold prices, according to the World Gold Council (WGC). 

The average price for the first quarter was $1,690.57 per ounce, 22 per cent higher than in the same period last year. And when looking at gold demand value there was a 16 per cent increase yoy to an estimated $59.7 billion.

Demand for the quarter was underpinned by increased demand in China, continued central bank purchasing and inflows into exchange-traded funds (ETFs). 

“China and India have seen continuing economic growth and whilst China’s economy is expected to slow, it will nonetheless surpass the rates of growth in the West. As we previously forecast it is likely China will become the largest source of demand for gold in 2012,” said Marcus Grubb, managing director, Investment at the World Gold Council.

Indian physical demand was hit by a new tax on gold jewellery, two increases in the import duty for gold and weakness and volatility in the rupee. Jewellery demand fell to 152t, or 19 per cent yoy, while investment demand was down 46 per cent at 55.6t. 

In May, the Indian government withdrew the new tax on jewellery and “the market is already responding positively” WGC noted.  

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