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WGC: Q3 Total Gold Demand Drops 2% Year-Over-Year To 929.3 Tons, Down Vs Previous Quarter

By Debbie Carlson of Kitco News
Thursday November 13, 2014 12:01 AM

(Kitco News) - Total global gold demand in the third quarter fell 2% to 929.3 metric tons, versus 2013’s third quarter, the World Gold Council said Thursday.

The WGC said a relatively stable gold price and stable U.S. dollar contributed to a quiet third quarter, with the investment sector subdued.

In its Gold Demand Trends report covering the third quarter of 2014, the WGC said total jewelry demand fell 4% in the third quarter, to 534.2 tons, versus the third quarter 2013. Technology demand fell 5% to 97.9 tons, and total bar and coin demand fell 21% to 245.6 tons. Exchanged-traded funds saw outflows of 41.3 tons. However, total investment demand rose 6% year-over-year to 204.4 tons. Central bank net purchases were down 9% to 92.8 tons.

The World Gold Council is an industry group that promotes gold.

Total supply fell 7% to 1,047.5 tons. Mine output rose 1% to 812 tons, with total mine supply flat at 797 tons. Recycled gold supplies fell 25% to 250.5 tons, and net producer hedging was a negative 15 tons.

Total demand from greater China fell 37% to 194.1, with mainland China at 182.7 tons. Total Indian demand bucked the weaker trend and rose 39% to 225.1 tons on the back of strong jewelry demand. Middle East demand was down 15% to 46.5 tons, while U.S. demand rose 3% to 42.3 tons, also because of higher jewelry sales. European demand was down 6% to 71.9 tons.

Jewelry Demand

The 4% drop in total global jewelry demand still reflects the activity seen in the gold market in the third quarter of 2013, the WGC said, when third quarter demand was at its highest since 2008. Compared to the five-year average, third-quarter jewelry demand is marginally stronger.

India’s jewelry demand was the engine behind global sales, the WGC said, as third-quarter Indian gold jewelry demand was 182.9 metric tons, up from 114.5 tons in the third quarter of 2013. The gain came from a strong demand for jewelry during the Diwali festival, along with improved optimism toward India’s economy in general and the relaxation of import tariffs by the Reserve Bank of India.

Third-quarter greater Chinese demand fell 38% to 157.1 tons.  Despite the sharp drop in Chinese demand in the third quarter, the WGC said compared to 2012, Chinese demand is comparable versus the same period.

Here, too, the strong buying seen in 2013’s third quarter influenced trends in 2014’s third quarter, the WGC said.

In China, consumer preferences were for 18-karat jewelry, rather than 24-karat jewelry, which may be the result of the government anti-corruption crackdown, the group said. Demand increased during the Golden Week holiday, and by the fourth quarter, demand is expected to rise because of stocking ahead of Chinese New Year.

U.S. gold jewelry demand also rose in the third quarter, up 4% from the third quarter of 2013, as an improving economy spurred demand.

In other regions, Turkey’s jewelry demand was 19.2 tons, the lowest third-quarter figure ever. The WGC said consumers were worried about domestic political turmoil, a weak economy, and increased violence near the Turkish-Syrian border. Middle East jewelry demand fell 14% versus a year ago.

Investment

As in overall jewelry demand, the strong demand of 2013 was hanging over the investment side of the market in 2014. Bar and coin demand was 245.6 tons, down 21% versus 2013’s third quarter. Still the WGC said third quarter demand is close to the 10-year average of 240.5 tons.

Additionally, the WGC said purchases of medallions and imitation coins in India rose 53% in the third quarter, as the tariffs on imports spurred more domestic manufacturing.

Third-quarter ETF outflows were 41.3 tons, much smaller than the outflows of 120.2 tons seen in the third quarter of 2013.

Central bank purchases were 92.8 tons, down from the 101.5 tons seen a year ago, and above the five-year average of 87.5 tons. Major buyers were Russia, Kazakhstan and Azerbaijan.

Supply

Third-quarter supply fell 7% versus a year ago, with year-to-date supply flat at 3,147.4 tons, with recycling well below year-ago levels, the WGC said.

Mine supply of 812 tons in the third quarter was up 1%, and was over 800 tons for the third time ever.

Scrap metal sales continued to fall, and this trend is expected to continue into 2015 as lower prices do not encourage sales, with recycling at 250.5 tons, down 25% year-over-year.  Recycling year-to-date is 807.2 tons, the lowest since 2007 and 35% under the peak years of 2009-2012.

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By Debbie Carlson of Kitco News; dcarlson@kitco.com
Follow me on Twitter @dcarlsonkitco

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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