World Economy

Global Gold Demand at 6-Year Low

Global Gold Demand at 6-Year LowGlobal Gold Demand at 6-Year Low

Global gold demand dropped 12% in the second quarter of the year, hitting a six-year low of 914.9 tons, data from the World Gold Council shows.

According to the industry body’s Gold Demand Trends, demand was down in all sectors, due mainly to a decline in consumption from top buyers India and China, Infomine reported.

Positive figures coming out of Europe and the US failed to offset the general drop, caused by directionless prices, the report adds.

Total gold supply was also affected in the three months to June 30. The total was down 5% to 1,033 tons, as an increase in mine production of 3% to 787 tons in Q2 of 2015 was offset by declining recycling levels—down 8% to 251 tons.

“It is fair to say that investment demand for the quarter remained muted given the continuing recovery in the US economy and booming stock markets in India and China during the quarter,” said Alistair Hewitt, head of Market Intelligence at the World Gold Council.

“Conversely, sharp falls in Chinese stock markets have shaken the largely consumer investment base and we are seeing early indications of interest in buying gold again—all illustrating the unique self-balancing nature of gold demand and the diverse drivers which underpin it,” Hewitt added.

After rising to over $1,200 per ounce in June, gold prices have tumbled, facing seven weeks of mostly uninterrupted losses, the longest fall since 1999. After mid-July, the situation got even worse, with bullion falling below $1,090 per ton as sellers in China appeared to offload the precious metal.

That’s also when China’s announced gold reserves—though exhibiting significant growth—resulted to be much lower than all expectations.

Juan Carlos Artigas, director of investment research at WGC, told, it is worth noting that the report released Thursday covers the period from March to June 2015, which means it precedes more recent activity in July and August. When considering the last two months, however, the WGC sees a more encouraging picture emerging on the horizon, Artigas added.

The analyst highlighted that, in reality, demand has been fairly consistent overall when seen as part of a longer term trend. “The apparent weakness in Q2 2015 relates to strength seen in previous years, especially in 2013, when consumer demand grew exponentially. This front loaded some of the demand that normally would have been done later,” he concluded.