India’s appetite for gold takes global demand to two-year high

Overall demand reached 1,121 tonnes in the period ended in September, up 8% compared to the same period last year, becoming the highest increase since the second quarter of 2013. The rise, however, was tempered by increased outflows from bullion-backed exchange-traded funds, WGC said.

China and India remain the dominant figures in the global gold market, accounting for close to 45% of total demand, said Alistair Hewitt, director of market intelligence at the London-based council.

But while Indian consumer demand, including purchases of bars, coins and jewellery, jumped 13% to 268 tons, the council warned the outlook for the fourth quarter was “muted.”

Bar and coin buying rose by a third on the back of lower prices and also a sense of instability brought by a conflict between Russia and Ukraine, and the crisis in Greece.

It was in the United States, however, where WGC saw the most dramatic growth, with US Mint Eagle sales reaching their highest level since Q2 2010. Global jewellery demand also picked up, in what is traditionally a quiet time of the year for jewellery demand.

Other key results for the period were:

* Total consumer demand – made up of jewellery demand and coin and bar demand – totalled 928t, up 14%.

* Global investment demand saw a significant rise of 27% to 230t, up from 181t in Q3 2014. This was led by the US which saw a surge in bar and coin demand, up 207% to 33t from 11t on the same period last year, with support from China, up 70% to 52t and Europe up 35% to 61t.

* Global jewellery demand for Q3 2015 was up 6% year-on-year to 632t compared to 594t in Q3 2014. In India, demand was up 15% to 211t and China was up 4% to 188t. The US and the Middle East also saw gains, up 2% to 26t and 8% to 56t respectively.

* Central bank demand reached 175t, the 19^th consecutive quarter of net purchases.

* Demand in the technology sector declined 4% to 84t as the sector continued to endure pressure, with the industry choosing to shift towards alternative, cheaper materials in technological applications.

* Total supply was 1,100t in Q3, up 1% year-on-year. Total mine supply (mine production + net producer hedging) remained relatively flat up 3% year-on-year to 848t compared to 814t in the same period last year. Year-on-year quarterly mine production shrank by 1% to 828t in Q3 2015 against 836t in Q3 2014. Recycling levels were down 6% year-on-year to 252t compared to 268t in Q3 last year.

The lobby group forecasts demand for the year at 4,200 to 4,300 tons, after raising the estimate for central bank buying to a range of 500 to 600 tons, from between 400 and 500 tons, he said. Last year, overall demand totalled 4,217 tons.