Rallying Chinese shares and a six-year US bull market is cutting the appetite for gold baubles.
Global demand for jewelry, coins and bars fell 5 percent in the first quarter this year from a year earlier as shoppers in the Middle East, China and the US reined in purchases, the World Gold Council said in a report yesterday.
US and European investors bought bullion through funds backed by the metal in the three months through March, while China’s equity boom led buyers away.
Gold prices dropped by about 7 percent in the past year, trailing returns for the US dollar, global stocks and corporate bonds, on signs that the US Federal Reserve is moving closer to raising interest rates. In China, where people buy more gold than anywhere else, the nation’s main stock gauge doubled in 12 months.
“Attentions are being diverted by absolutely rampant stock markets,” Alistair Hewitt, head of market intelligence at the London-based council, said by telephone.
Consumer demand in some countries was hurt by “a weakening economy with people unsettled by slower growth,” he said.
An ounce of gold yesterday fetched US$1,214.25 in London, according to Bloomberg generic pricing.
Global jewelry demand slipped 3 percent to 600.8 tonnes in the first quarter, according to the report. In China, purchases fell 10 percent from last year’s record, while Indian sales jumped 22 percent as import restrictions eased.
Worldwide bar and coin buying dropped 10 percent to 253.1 tonnes in the same period, the council said.
The declines were offset by money flowing into exchange-traded products. Investors bought 22.7 tonnes through the funds, the first quarterly increase since 2012, data showed.
“You are more likely to get the institutional investors involved [in ETPs],” Hewitt said. “We are not going to say that bearish sentiment has completely gone away, but it is a subtle improvement.”
Central banks added gold to their reserves for a 17th straight quarter, the report showed.
The 119.4-tonne purchase was the smallest since 2013. For the whole year, nations will probably buy 400 to 500 tonnes, Hewitt said.
Mine production increased by about 2 percent to 729.2 tonnes, while supply from recycled metal declined 3 percent to 355.1 tonnes, the report said.
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