Despite surging appetite for jewellery, coins and bars, overall gold demand hit a four-year low in the second quarter of 2013, according to a latest World Gold Council (WGC) report.
Second-quarter demand fell 12% in tonnage terms to 856.3 metric tons, compared with the same quarter a year ago. In dollar terms, demand dropped 23% to US$39 billion.
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The second quarter’s heavy liquidation from gold-backed ETFs brought outflows for the year to 578.7 tonne. The WGC said speculation that the Federal Reserve may be set to curb its bullion-friendly quantitative easing had spooked investors.
The WGC’s data showed that Central bank buying has also eased. The council said it expects official-sector purchases of 300-350 tonne this year, down from 544.4 tonne in 2012, after a 100-tonne drop in the first half.
The average gold price for the quarter was US$1,415/oz, down 12% on the same period last year. In value terms, gold demand in the second quarter of 2013 was US$39 billion, down 23% compared to the second quarter of 2012.
However, India and China saw a jump in demand as global prices fell on fears of a sooner-than-expected tapering of the US stimulus as the American economy recovers.
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By GlobalDataIn China, demand was up 54% compared to a year ago; while in India demand increased by 51%.
Globally, jewellery demand was up 37% in the second quarter to 576 tonnes from 421 tonnes in the same quarter last year, reaching its highest level since third quarter of 2008.
There were also significant increases in demand for gold jewellery in other parts of the world: the Middle East region was up by 33%, and in Turkey demand grew by 38%.
Bar and coin investment grew by 78% globally compared to the same quarter last year, topping 500 tonnes in a quarter for the first time.
In China, demand for gold bars and coins surged 157% compared with the same quarter last year, while in India it jumped 116% to a record 122t. Taking jewellery demand and bar and coin investment together, global consumer demand totalled 1,083 tonnes in the quarter, 53% higher than a year ago.
