Gold demand up 10% in Q3 – WGC
miningweekly.com
By: Liezel Hill
19th November 2009
TORONTO (miningweekly.com) – Total identifiable demand for gold in the third quarter reached 800,3 t, or $24,7-billion in dollar terms, the World Gold Council (WGC) reported on Thursday.
Demand was up 10% compared with the second quarter, but 34% lower than in the same period last year, which was when investment demand for the metal surged as a response to the deepening global financial crisis at the time.
This year, gold's long-term store of value and wealth preservation qualities continued to attract investors and consumers during the September quarter, the WGC said in its quarterly demand trends report.
The organisation also compared the third-quarter figures against the five-year third-quarter demand average to 2007. On that basis, tonnage declined just 4%.
Compared with the second quarter, exchange-traded funds and inferred investment fell slightly quarter on quarter, while jewellery, industrial and retail investment demand recorded improvements.
“This quarter’s demand trends demonstrate the diverse and robust nature of the gold market which underpins the gold price,” commented WGC Aram Shishmanian.
“Early signs of economic recovery and improving consumer confidence have seen jewellery and industrial demand rise relative to last quarter, and the profit taking witnessed earlier in the year has markedly decreased.”
The outlook for investment is generally positive, with demand levels likely to be well supported by economic and currency uncertainty, inflation concerns and the investors' desire to diversify portfolios, Shishmanian said.
“In the official sector, we expect to see a continuing trend of central banks diversifying their dollar exposure in favour of the proven store of value represented by gold.”
During the third quarter, gold prices averaged $960/oz, up 10% in dollar terms from the same period in 2008.
Jewellery demand was up 17% quarter on quarter, due in part to seasonal factors, but the high prices, especially in local currencies, resulted in a 30% drop in jewellery demand compared with a year earlier.
Identifiable investment demand, which includes gold exchange traded funds and bars and coins, was 227,2 t, a slight increase on second-quarter levels, but down 46% from the “extreme highs” of the third quarter of 2008, the WGC said.
Flows into gold ETFs remained strong in absolute terms at 41,4 t, but were again significantly lower than the relatively high figures recorded a year ago.
The total supply of gold contracted slightly in the third quarter at 833 t, 8% lower than the second quarter and 5% below year earlier levels.
However, mine production showed a “firm improvement” during the quarter, reaching 670 t.
“The key factors weighing on supply were an increase in producer dehedging and a negative contribution from the official sector, in addition to lower levels of scrap than previous quarters, the WGC said.
Gold was trading at around $1 144/oz on Thursday afternoon. The metal set a new record at $1 153,40 on Wednesday. |
