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Gold Demand Drops By 7 Percent Globally, World Gold Council

On the 6th of Feb, 2018 a report compiled by The World Gold Council stated that gold demand has dropped by 7% globally. The Gold Demand Trends report also states that gold demand rallied in the early months of 2017 by 6% to reach 1,095.8 tons

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The World Gold Council claims that demand for gold has dropped by 7% in 2017 globally. Gold demand rallied in the closing months of 2017, gaining 6% year-on-year in Q4 to reach 1,095.8 tonnes (t). However, overall demand for the full year fell by 7% to 4,071.7t, compared with 2016, according to the latest Gold Demand Trends report. Inflows into exchange-traded funds (ETFs) continued steadily throughout the year, totalling 202.8t, Similarly, although central banks continued to add to reserves, purchasing 371t in 2017, buying was down 5% year-on-year.

Full-year bar and coin demand fell 2% as US retail investment dropped sharply. However, the year saw a recovery in both jewellery and technology demand, each making modest gains compared with 2016, as improving economic conditions lifted consumer sentiment in India and China, and an increase in gold-containing technology, such as smartphones and tablets, boosted demand.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, commented:

“It’s not surprising to see overall gold demand down given the backdrop of monetary policy tightening and strong equity markets in 2017, but the market is not in bad shape. The US dollar gold price was up 13% and institutional investors, especially in Europe, continued to add gold to their portfolios as a hedge against frothy asset prices and geopolitical uncertainty. “Jewelry demand picked up as economic conditions improved in China and a policy change in India removed a barrier to demand, while next-generation smartphones boosted gold demand from technology companies.”

2017 saw the first annual increase in jewelry demand since 2013, but the sector remains weak in a historical context. Relatively stable prices and improving economic conditions paved the way for growth, but demand remains soft compared with long-term average levels. India and China eclipsed other markets, together accounting for 75t of the 82t (4%) increase in global full-year demand.

Official gold reserves swelled by 371t in 2017, 5% down on 2016 levels. Turkey joined Russia as the most prominent of the central bank buyers.

The technology sector recovered in 2017, up 3% to 333t compared with 2016, ending a 6-year downtrend. The volume of gold used in electronics and other industrial applications grew steadily throughout the year, thanks to the increasing prevalence of new-generation features in smartphones, vehicles and laptops.

Some of the key findings of the report are as follows:

  • Overall demand was 1,096t, an increase of 6% compared with 1,036t in Q4 2016
  • Total consumer demand fell by 10% to 906t, from 1,006t in the same period last year
  • Total investment demand was up 41% to 286t compared with 202t in Q4 2016
  • Global jewelry demand grew 3% to 649t, from 630t in the same period in 2016
  • Central bank demand slowed 38% to 73t compared with 118t in Q4 2016
  • Demand in the technology sector increased 5% to 88t compared with 84t in Q4 2016
  • Total supply was up 1% to 1,095t, from 1,080t in the same period last year
  • Recycling grew 8% to 277t compared with 257t in Q4 2016

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