The falling price of gold has pushed up demand from consumers, according to the latest official figures from the World Gold Council.
The markets with the largest consumer appetites for gold are China and India – and the amount of gold purchased soared in the second quarter of 2013, compared to the same time 12 months ago.
Global figures showed a 37% increase in demand in the quarter to 576 tonnes, says the World Gold Council, reaching a peak last seen in Q3 2008.
Demand in China was up 54% and 51% in India year-on-year. Other big markets were the Middle East (up 33%) and Turkey (up 38%).
The average gold price for Q2 2013 was US$1,415 an ounce, down 12% year-on-year
Gold demand soars in India and China
Gold bar and coin investment surged by 78% worldwide in the quarter, compared to the same time the year before.
In China, the change was a massive 157% increase, while in India; the figure was 116% up.
Adding jewellery to the demand for bars and coins, consumers bought 1,083 tonnes of gold in the quarter – up 53% on Q2 2012.
Other calls on gold were from:
- Central banks – 71 tonnes
- Technology businesses – 104 tonnes
Demand for gold-backed ETFs dropped by more than 400 tonnes as speculators and hedge funds sold as the price of the precious metal fell.
Adding consumer and commercial demand, overall global demand for gold was 856 tonnes down – 12% less than in Q2 2012.
Recycling bullion slipped 21% in the quarter, while extraction was up 4% to 732 tonnes. Supply was 6% down on the same quarter a year ago.
India gold imports
“Q2 2013 followed the trend of the previous quarter as the market rebalances as ETF sales hit a demand for jewellery, bars and coins,” said Marcus Grubb, a World Gold Council spokesman. “The surge in investment was a common theme around the world, especially in the two big markets of India and China.
“The self-balancing nature of the gold market was reflected in pricing and demand. We have seen across decades that the market rises and falls in line with the global economic cycle.
“The current shifts are nothing to worry about but just the normal ebb and flow of the markets.”
Meanwhile, the Indian government tightened the rules on buying gold again by banning importation of coins and medallions.
Import duty on gold was raised to a new high of 10% and retail buyers must pay cash for the precious metal. Imports will need licensing and must take place through a bonded warehouse.