Q3 Gold Demand Up 6%; Jewelry Demand Reaches Quarterly Record of $25.5Bn
November 17, 11
(IDEX Online News) – Gold demand in the third quarter of 2011 reached 1,053.9 tons, an increase of 6 percent compared to the same period last year. Demand totaled $57.7 billion, an all-time high in value terms according to the World Gold Council’s (WGC) Gold Demand Trends report for the third quarter of 2011, which was released today (Thursday).
According to the WGC, the increase was driven by investment demand, which rose 33 percent year-over-year to 468.1 tons, generating record quarterly demand of $25.6bn.
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“Unsurprisingly investment demand for gold was a key driver during the third quarter. Increasing levels of inflation, the U.S. credit rating downgrade, a worsening eurozone sovereign debt crisis and the lackluster performance of many assets drove investors to increase holdings in gold in order to protect their wealth,” said Marcus Grubb, managing director, Investment at WGC.
“Given gold’s proven risk mitigation properties, it is likely that investors will continue to seek protection from economic uncertainty, which shows no signs of abating. The long-term fundamentals for gold remain strong with a diverse and growing demand base coupled with constrained supply-side activity,” he added.
The report reveals that investment demand in Europe reached a record quarterly value of €4.6 billion ($6.2 billion), equating to 118.1 tons – a year-over-year increase of 135 percent.
At 131 tons, equivalent to RMB46 billion ($7.24 billion), Chinese jewelry demand increased 13 percent higher year-over-year. Most of this increase was seen in smaller cities where retail chains expanded their networks to meet increasing demand fuelled by rising income levels.
The WGC said China’s growing appetite for gold as a means of investment saw demand for gold bars and coins expand by 24 percent to 60.2 tons.
In India, traditionally a strong market for gold, jewelry demand was sluggish during the seasonally slow months of July and August. This slowdown, which has since recovered slightly, was compounded by high inflation and greater volatility in the local gold price.
Overall, Indian jewelry demand in the third quarter dropped 26 percent to 125.3 tons compared to 2010. However, it was not all doom and gloom. Yearly demand to the end of September was close to the record levels seen in 2010.
Gold supply was 1,034.4 tons in the quarter, 2 percent higher than 2010’s levels of 1,013.0 tons. Mine production increased 5 percent to 746.2 tons from 710.9 tons during the third quarter of 2010.
Despite record prices being reached during the quarter, recycling activity was relatively modest. Third quarter 2011 gold recycling accounted for 426.5 tons of supply, up 13 percent year-on-year from 379.1 tons.