eBusiness Weekly
Business Writer
Demand for Gold slumped in the first quarter of 2018 its weakest since 2008, the World Gold Council said yesterday, amid a fall in investment demand for gold bars, as a subdued gold price environment hampered demand.
According to the World Gold Council’s (WGC) latest report, demand for gold totalled 973,5 tonnes in the first quarter of the year down 7 percent year-on-year.
“This was largely caused by a fall in investment demand for gold bars and gold-backed exchange-traded funds (ETFs), as a subdued gold price environment hampered demand,” reads the report.
Weakness in bar and coin investment in China, Germany and the US saw global demand fall 15 percent to 254,9t.
“The range-bound gold price undermined investor interest in these markets, although China’s weakness was partly due to exceptional strength in Q1 2017.”
Jewelry consumption also slipped in the first quarter of 2018, edging down 1 percent to 488t. This was on the back of increased demand in China, buoyed by holiday demand. US demand also continued to improve in response to the supportive economic backdrop.
“Although demand was down year-on-year, we saw encouraging levels of jewellery demand in China, the US and Europe, continued growth in the technology sector, and steady inflows into ETFs, albeit at a slower pace than last year.
“Solid inflows into central bank reserves also highlight the ongoing relevance of gold as a strategic asset for institutional investors,” reads the report.
“Central banks added 116t to global official reserves in Q1 2018. This was the highest Q1 total for four years and in line with average quarterly purchases since Q1 2010 of 115t. Russia, Turkey and Kazakhstan again dominated the list of central banks buying gold, adding 91t between them. Indian consumers were, however, discouraged by rising gold prices, exaggerated by a weakening rupee, resulting in demand dropping by 12 percent from the comparative prior year.
Meanwhile gold-backed exchange-traded funds (ETFs) saw their fifth consecutive quarter of inflows after holdings grew by 32t, due solely to growth in North America. The WGC said gold prices were relatively subdued as prospect of rising interest rates led investors to pursue greater returns elsewhere.
“Investment in the first quarter was mixed, with rising interest rates on the one hand, and a sharp spike in stock market volatility on the other.”
Meanwhile, demand for gold in the technology sector continued to improve, up 4 percent on Q1 last year.
“The wireless sector was a key area of growth as 3D sensors for facial recognition were increasingly deployed in smartphones, gaming consoles and security systems.”
Meanwhile, the Zimbabwean Government has set a target of 30 tonnes this year, and miners believe the target is achievable, particularly after a solid performance in January which saw 2,6 tonnes being delivered.
