Gold

2012 sees gold demand hit record value level

In value terms, gold demand in 2012 was USD236.4bn – an all-time high, according to figures released by the World Gold Council.

Gold demand in value terms for the final quarter of the year was six per cent higher year-on-year at USD66.2bn, marking the highest ever Q4 total.

Global gold demand in Q4 2012 was 1,195.9 tonnes(t), up four per cent on the same quarter in 2011. In Q4 2012, the average gold price reached a record level of USD1,721.8/oz, up one per cent on the previous record average price in Q3 2011. The average price during 2012 was USD1,669.0/oz, up six per cent from USD1,571.5/oz in 2011.

According to a report from the WGC, whilst Indian full year demand was down 12 per cent on the previous year, the market performed strongly in the final quarter with total demand at 261.9t, an increase of 41 per cent on the same period last year.  Both jewellery and investment demand reached their highest levels for six quarters. Demand for jewellery was up 35 per cent year-on-year to reach 153.0t, and strong retail demand led to 108.9t of investment buying.  In India the prospect of duty increases, which came in to force in January 2013, may have added to strong buying in the final quarter to beat the anticipated price rises.

Chinese demand was flat year-on–year, reflecting the impact of economic slowdown. However looking at Q4, total demand was up one per cent on the previous quarter to 202.5t. Jewellery demand was137.0t up one per cent on Q4 2011 and investment demand was 65.5t, up 2 per cent on the previous year. These increases may reflect the fact that the economic slowdown in China appears to have been shorter than expected.

Central bank buying for the full year rose by 17 per cent compared to 2011, totalling 534.6t, the highest level since 1964. Central bank purchases stood at 145.0t in Q4, up 29 per cent on the corresponding quarter in the previous year, making this the eighth consecutive quarter in which central banks have been net purchasers of gold.

Global investment in ETFs in 2012 was up significantly by 51 per cent on the preceding year, though Q4 was down 16 per cent to 88.1t when compared with the high levels recorded in Q3 2012.

Marcus Grubb, managing director, investment at the World Gold Council says: “China and India remain the world’s gold power houses, and by some distance, despite challenging domestic economic conditions. In India, consumer sentiment towards gold remained strong despite measures aimed at curbing demand, reaffirming gold’s role in Indian society. In an underdeveloped financial system in India, gold has an important role to play.

“Notwithstanding the predicted economic slowdown in China, investment demand was up 24 per cent in Q4 on the previous quarter and jewellery consumption held steady at 137.0t.

“Central banks’ move from net sellers of gold, to net buyers that we have seen in recent years, has continued apace.  The official sector purchases across the world are now at their highest level for almost half a century.

“Despite the turbulent macroeconomic climate throughout the year, as well as the regional uncertainties affecting India and China, the two largest gold markets, annual demand was 30 per cent higher than the average for the past decade.”

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