Gold demand has ‘soft start’ to 2018

Global gold demand has dropped 7 per cent in the first quarter of 2018 due to weaker investment, according to the latest trends report from the World Gold Council (WGC).

Demand of 973.5t was the lowest first quarter since 2008. The main cause, the report explained, was a fall in investment demand for gold bars and gold-backed exchange-traded funds (ETFs), partly due to range-bound gold prices.

“Jewellery demand was steady at 487.7t, as growth in China and the United States compensated for weaker Indian demand,” the report said.

“China was buoyed by holiday spending and the supportive economic backdrop improved US demand. By contrast, Indian consumers were discouraged by rising local gold prices.”

Central banks bought 116.5t of gold, up 42 per cent year-on-year (y-o-y), while also being the highest first quarter total in four years.

Technology demand also extended its recent upward trend, growing 4 per cent y-o-y to 82.1t.

“The wireless sector was a key area of growth as facial recognition is increasingly deployed in smartphones, gaming consoles and security systems,” the report added.

The total supply of gold increased 3 per cent to 1063.5t, primarily due to a modest increase in producer hedging. Mine production was fractionally higher at 770t.

Source: Metals Focus; GFMS, Thomson Reuters; World Gold Council

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