Gold has lost a little lustre as worldwide demand for the precious metal dropped slightly, according to the latest research by the World Gold Council.
Worldwide, 990 tonnes of gold were shipped to buyers in the second quarter of 2012 – a drop of 7% from 1,065 tonnes in the first three months of the year.
Demand was stable stable year on year at US$51.2 billion, compared to US$51.6 billion in the second quarter in 2011.
The average price of gold in the second quarter of 2012 was US$1609.49 per ounce, 7% higher than the average for Q2 2011.
Exceptional demand in 2011 and the challenging global economic climate were blamed for the dip.
Europeans hungry to buy gold
The research by the World Gold Council, the trade body for 23 leading mining firms, also disclosed:
- In India, investment and jewellery demand fell to 181.3 tonnes, down from 294.5 tonnes in the second quarter of 2011.
At 56.5 tonnes, investment demand was less than half the level of the same period last year. Indian jewellery demand dropped to 124.8 tonnes, down 30% year-on-year from 179.5 tonnes.
- China’s investment and jewellery demand was 144.9 tonnes, down 7% from 156.6 tonnes in the same quarter last year. Investment demand fell by 4% year-on-year to 51.1 tonnes as Chinese investors stayed away from the market.
- The ongoing sovereign debt crisis in the eurozone encouraged European investors to buy gold. Demand for bars and coins from retail investors posted a 15% year-on-year increase to 77.6 tonnes; 19% higher than the five-year quarterly average of 65.2 tonnes.
- Investment demand fell by 23% year-on-year to 302.0 tonnes, slightly below the five-year quarterly average of 340.3 tonnes. Excluding India and China, retail investment demand was up 16% year-on-year in tonnage terms.
- Official sector demand in the quarter reached a record high of 157.5 tonnes, more than double the level of the same quarter in 2011 and accounting for 16% of overall global demand. Central banks that bolstered their holdings during the period included the National Bank of Kazakhstan, and the central banks of the Philippines, Russia and Ukraine.
Challenging economic climate
Marcus Grubb, managing director of investment at the World Gold Council said: “Gold’s performance reflects the continuing challenging economic climate. A softness in India and China, who between them represent over 45% of the total second quarter jewellery and investment demand accounts for much of the slowing of global gold demand.
However, through all the uncertainty, it is clear that gold’s fundamental properties as a vehicle for capital preservation and a source of liquidity continue to endure. This is evident from the activity of central banks, the ultimate long term investors, which continue to increase their gold holdings to diversify reserves and protect against reliance on one or more foreign currencies.”