Gold demand softens in Q3

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Figures from the World Gold Council suggest demand for gold globally fell by 2% year-on-year in the third quarter of 2014.

Demand fell in areas such as technology, where substitutes took greater market share, although net investment demand rose 6% over the period, and central banks continued to add gold to their holdings. Demand for bars and coins was particularly weak, however, with an estimated 21% fall as measured by year-on-year figures.

Supply dropped 7% over the period.

Key factors influencing demand for gold in the latest quarter included the dollar price as well as the traditional surge in jewellery sales in India during Diwali. This year’s Diwali saw the biggest proportional surge in gold sales in India since 2008, the Council noted.

Jewellery sales also continue to strengthen in the US market. The Council suggests that sales are being boosted by the ongoing economic recovery in that country, coupled with lower dollar prices for gold.

In contrast, third quarter sales in Turkey were the weakest ever recorded, against a backdrop of economic and political uncertainty, while demand across the Middle East was down some 14% year-on-year.

Looking at the changes in ETF demand since this time last year, the Council concludes that “tactical investors have largely exited and the remaining base of ETF positions are held as strategic investments.”






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