Gold demand increases 6% year-on-year to a record $57.7 billion.
The World Gold Council (WGC) has released its gold demand trends for Q3 noting a strong rise in investment demand “as investors across the globe sought wealth preservation”, while demand from the UK jewellery indsutry has fallen 15%.
Third quarter gold demand has shown a 6% year-on-year increase to reach 1,053.9 tonnes worth a record $57.7 billion (£36.6 billion). Gold reached its peak price on September 5 and 6 this year, with a price of $1,895 (£1,203) per troy ounce.
Jewellery demand is said to have shrunk in the face of record gold prices paired with the continued tough economic conditions that jewellery designers, retailers and manufacturers are facing.
Demand trends include a slight rise in mine supply, with an increase in mining activity and gold recycling adding to this rise.
At the end of September gold had gained 8% over the quarter. Its price was up 15% compared to September last year and its average sum – £1,081 – was 39% above the average during Q3 2010.
The WGC says that gold prices have stabilised once again though the metal’s has outperformed platinum in terms of price in recent weeks.
Gold has increasingly become the investor’s choice due to its risk reduction factor and the current benefit of positive returns.
The global gold jewellery market is said to have contracted 10% in Q3 of 2011 however jewellery demand in terms of value was 24% higher year-on-year reaching a record $25.5 billion (£16 billion).
In India, the world’s largest gold jewellery market, gold experienced a 26% fall in demand per tonne owing to volatile gold prices during the Hindu celebration period.
The Middle East, South East Asia and the West also showed weaker levels of demand, with only China, Hong Kong, Russia and Japan bucking the trend with healthy demand for gold jewellery.
China has been the largest single market for gold jewellery during Q3, accounting for 27% of the world’s demand, a 13% increase year-on-year compared to Q3 2010.
In the US gold demand showed a downward trend in Q3, falling 12% on the back of continued economic difficulties but in terms of value gold demand was up 23% year-on-year. Styles of gold jewellery in the US is moving towards lightweight pieces with substitute metals such as steel and silver growing in popularity.
Gold jewellery demand in the UK and Italy fell 15% and 22% respectively. The value of gold demand in the UK increased 14% to £132.2 million. Hallmarking figures in the UK have shown declines across all carat standards with the exception of 24ct gold.
In the context of the present conditions, more customers are looking for hollow or lighter-weight gold products, while manufacturers have had to lower their margins to sell off older stock or otherwise edit their credit terms with retailers.
In terms of jewellery sales, the WGC predicts that the remaining quarter of 2011 should pick up due to the festive season.
Investor demand was widespread across the world, with the WGC outlining double-digit growth in demand for gold coins and bars, with only Japan, India and the US showing a decline in gold bar demand, despite Western investors being attracted by gold’s “insurance-like properties”.
Gold recycling totalled 426.5 tonnes in Q3, a 13% year-on-year rise, however the supply of recycled gold is said to be “well below” the quarterly high of 609.8 tonnes as experienced in Q1 of 2009 when prices were below the $1,000 per ounce mark.