Gold Q1 imports down 50% due to down-stocking by traders: WGC

  • Gold Q1 imports down 50% due to down-stocking by traders: WGC

Gold Q1 imports down 50% due to down-stocking by traders: WGC

"Decline in demand can be attributed to a number of factors, including the rising local gold prices, a substantial drop in the number of auspicious wedding days this year compared to the previous year, and an anticipation of an import duty cut in the budget", WGC India Managing Director PR Somasundaram said.

Gold supply also increased, with improvements in mine production levels spurring a three per cent rise.

The fall in demand was largely caused by a decline in investment demand for gold bars and gold-backed exchange traded funds (ETFs) following a subdued gold price environment, it said. Russian Federation was the biggest official sector buyer, responsible for just over a third of central bank demand.

The global demand for jewellery was flat at 487.7 tonnes.

Global demand for bar and coin investment gold fell 15% thanks to weaker demand from Chinese, German and U.S. buyers. India - the second-largest gold jewelry consumer after China - reported its weakest quarter since 2008, falling 12 percent year on year to 87.7 tons.

According to World Gold Council, for year 2018, full year gold demand expectations for India is in the range of 700 - 800 tonne.

The WGC blamed the fall on a 15% dip in investment in gold bars to 254.9 tonnes, as investors in the US, China and Germany held off from buying the yellow metal. USA demand rose 2% to 23.3 tonnes, the highest level since 2009.

Alistair Hewitt, head of market intelligence at the World Gold Council, pointed to relatively solid global economic growth and rising interest rates.

ETF inflows fell 66 percent year-to-year, sitting at 32.4 tonnes versus the 96 tonnes of inflows seen in Q1 2017.

Holiday demand helped Chinese demand and a supportive economic backdrop drove sales in the United States, while the weakening rupee against rising gold prices slashed Indian demand by 12%.

However, the Central Banks of the world added 116 tons to global official reserves where Russia, Kazakhstan and Turkey dominated the list adding 91t between them.

The improving economic outlook contrasted with a sharp spike in stock market volatility.

"Since becoming net buyers in 2010, central banks have bought - on average - 114.9 tonnes per quarter". Gold is used in bonding wire in memory chips and complex sensors for smartphone features such as 3D video, virtual reality and iris and gesture recognition, as well as in gaming consoles.

The weak demand for the precious metal also coincided with prices holding within their narrowest range of any quarter in more than a decade.