Gold consumption fell by an annualised 16 percent in the second quarter of the year as Chinese and Indian buyers cut back on record purchases a year earlier, sector data showed yesterday.
A director of the World Gold Council (WGC) forecast the full-year result would also be lower than last year, but would probably not represent as big a drop as during the three months from April through June.
A total of 964 tonnes of gold was bought in the quarter, according to figures compiled by the WGC, a federation of the biggest producers.
The decline was largely the result of weaker jewelry purchases, which typically account for half of global demand, and which were 30 percent lower at 510 tonnes, the data showed.
In the two biggest consumer countries, China and India, demand for gold jewelry was down by 45 percent and 18 percent respectively, with specialists pointing to market saturation following records set last year.
“It’s important to remember that last year was an exceptional year in the gold market ... with a big fall in the gold price, very large exchange-traded fund redemption, and massive increase in consumer demand,” WGC managing director of investment strategy Marcus Grubb told reporters.
He referred to a 28 percent drop in the price last year, and also to financial exchange-traded funds that are based on gold stocks.
Grubb said the market appeared to be stabilizing and that the outlook was “likely to look better later in the year than it is now, although it will be down on last year but not as much as these figures suggest.”
Two factors were expected to underpin gold prices, he said.
They were further easing in monetary policy by the European Central Bank, which could free up funds for investment, and the fact that “geopolitical risks are increasing and unlikely to go down.”
Central banks rWemained net buyers of gold for the 14th consecutive quarter.
The WGC figures showed them buying a total of 117.8 tonnes — an increase of 28 percent.
Russia was one of the biggest buyers, adding 54 tonnes to its stocks.
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