The plummeting price of gold has sparked a massive surge in demand from buyers keen to own the precious metal, says a new report.
The World Gold Council Gold Demand Trends survey for the first quarter of 2013 shows demand has rocketed by 12% with India and China leading the way.
Marcus Grubb, the council’s managing director of investment, said: “April’s price drop has been a catalyst for the demand which has left retailers with stock shortages and refineries bringing in delivery waiting lists.”
He said that 81% of the market was made up of the sales of jewellery, gold coins and bars, and demand from the technology firms.
Mr Grubb added: “The demand for gold shows that the market has remained robust, even before the April’s events.”
Unprecedented demand
Demand for gold in China rose by 19% in the first three months of this year, compared to last year and by more in India.
The popularity of gold remains strong in the Middle East which saw sales rise by 15% and sales of gold rose in the US for the first time since 2005 by 6%.
However, a closer examination of the council’s report reveals an unprecedented demand from buyers for gold bars and coins, with sales rocketing by 52% in India and 22% in China.
In the US sales were up 43% over the same period last year, and across the world gold bar values rose by 8% and official coins, such as American eagles, soared by 18%.
However, the huge drop in the value of gold resulted in the total value of gold sales in the first quarter dropping by 23% compared to the final quarter of last year.
Speculators take profits
Mr Grubb said: “There has been a move by some holders of gold-backed ETFs, which accounted for 6% of gold sales last year, to collect their profits and buy equities.
“To balance this fall in ETF holdings of gold there’s been an increase of 10% in the value of investment in gold coins and bars over the same quarter last year, which is still an increase of 12% on the last quarter of 2012.”
He added that long-term investment remain strong which is underlined by the growing demand for gold coins and bars.
The council also reports that the world’s central banks are still big buyers of gold and the first quarter of 2013 is the seventh consecutive period for the buying of more than 100 tonnes of the commodity and the ninth consecutive quarter when they have been buying more than they are selling as part of their portfolio diversification.
