Trend continues towards lower grade metals; rest of world on the up.
The latest World Gold Council (WGC) Gold Demand Trends figures for Q1 2013 have revealed a declining UK market, with a drop in the value of retail gold jewellery sales in the first quarter.
The WGC figures, released today, show that the European and UK markets for gold demand in jewellery in Q1 have contracted, with UK gold demand down 7%. The decline was described as a "new low" for the UK, owing to difficult market conditions and the continued shift towards lower carat gold, silver and non-precious materials.
The UK’s total consumer demand for gold jewellery hit 2.7 tonnes in Q1, a 7% year-on-year decline, while the value of UK gold demand totalled $141 million (£92.3m), down 10% compared to Q1 2012.
In Europe, excluding CIS countries, gold demand totalled 5.6 tonnes in Q1, down 10% year-on-year.
In total, global jewellery demand value hit £28.9 billion (£18.9bn), with the WGC describing the rest of the world as undergoing "widespread resurgence" in terms of gold jewellery demand.
In all, global gold jewellery demand was up 12% in Q1, about 551 tonnes, driven by significant increases in India and China which together accounted for a total 62% of gold demand in Q1 alone.
The US showed its first year-on-year increase in gold demand since 2005, with a total value of $986 million (£646m) in Q1, however jewellery at the lower end of the market continued to suffer weakness owing to consumer sentiment.
Gold supply changed marginally in Q1, totalling 1,057 tonnes, a modest year-on-year increase, while mine production was up 4% on Q1 2012, totalling 688 tonnes.
A wide range of countries also reported an increase in gold production, in particular the Dominican Republic, China, Canada and Brazil.
Supply of recycled gold fell for the fourth consecutive year, dropping 4% to 366.6 tonnes.
Marcus Grubb, managing director of investment at the World Gold Council commented: “The price drop in April, fuelled by non-physical moves in the market, proved to be the catalyst for a surge of buying that has left many retailers short of stock and refineries introducing waiting lists for deliveries. Putting this into context, sales of bars and coins, jewellery and consumption in the technology sector still make up 81% of the market.
“What these figures show is that even before the events of April, the fundamentals of the gold market remain robust with; growing demand in India and China, central banks consistently adding gold to their reserves and strong buying of investment products such as gold bars and coins.”
In value terms, gold demand in Q1 2013 was $51 billion (£33.4bn), down 23% compared to Q4 2012. The average gold price of $1,632 (£1,069) per ounce was down 5% on the average Q4 2012 price, and down 3% on the same period the previous year.
Gold demand and supply statistics for Q1 2013
• First quarter gold demand of 963 tonnes was down 13% compared with Q1 2012
• The value measure of gold demand in Q1 2013 was US$51bn, down 16% on the year before
• The Q1 2013 average gold price was US$1,632 down 3% on the year before
• Total investment demand was 320 tonnes in Q1 2013, flat compared with a year ago
• Demand in the jewellery sector was up 12% to 551 tonnes. Jewellery demand in China was 185t while demand in India was 160t
• The Q1 2013 total mine production was up 4% on last year at 688 tonnes. Recycling fell 4% resulting in a total supply that is 1% higher than a year ago