World Gold Council reveals hallmarking has dropped 9% year-on-year.

The World Gold Council (WGC) has released its gold demand trends for Q1, with global demand 5% lower than the record levels of Q1 2011, totalling 1,097.6 tonnes.

The WGC said that jewellers have been reaping the benefits of rising incomes in certain parts of the world, but says that it forecasts more modest growth for the remainder of 2012 as the market matures and economic growth decelerates.


Gold demand in the jewellery sector reached 519.8 tonnes in Q1 2012, down 6% compared to Q1 2011, but the quarter average price was some 22% higher.

In terms of dollar value, global demand for gold jewellery grew 14% to $28.3 billion (£17.8 billion) in Q1, but weaknesses in Europe and the Middle East took the shine off of growing demand in China, Russia and Egypt.

In the UK hallmarking figures revealed issues with demand and were a clear reaction to the rising gold price. Demand for gold jewellery grew by 4% to 3.1 tonnes, while the weight of gold being hallmarked in the UK slumped 9% in Q1 year-on-year.

At the end of the four quarters ended Q1 2012, gold demand totalled $1,195 million (£753mn), while in Q1 demand in terms of value grew 17% year-on-year to $163 million (£102mn).

China remained the largest gold jewellery market for the third consecutive quarter and dominated with a tonnage demand of 156.6 tonnes – 8% higher year-on-year – and accounting for 30% of global gold jewellery demand in Q1.

However the rising gold price eroded the markets in the US and Italy, with both countries struggling with double-digit declines. In the US demand dropped 10% to 17.6 tonnes, just half of the 36.5 tonne average that the US has exhibited in Q1 between 2006 and 2011.

Likewise in Italy rising living costs, lower wages and negative consumer spending meant that demand slid 14% to 35 tonnes.

Interestingly, Turkey has become a major global player in the gold market once more and is the fifth largest market for the yellow metal at present.

Its gold exports totalled nearly $1.8 billion (£1.13bn) last year following a fall in demand of 51% in 2009. Since then its market share – both in terms of exports and demand – has recovered, and gold jewellery demand grew to 70.1 tonnes in 2011.

As average prices have been materially higher than they were in Q1 of 2011, demand equalling $59.7 billion (£375bn) has meant a 16% increase in terms of value year-on-year in Turkey.

On a global scale, demand for gold jewellery exihibted a decline in reaction to the rising gold price, while physical demand for gold bars and coins were said to be modest compared to the demand for gold in the trading and invesment sectors.

Gold supply has shown an amount of hedging and recycling activity has also increased, equating to gold supply activity totalling 1,070.3 tonnes in Q1.

Mine production equated to 673.8 tonnes in the first quarter – a 3% increase on the Q1 average in 2011 while mine production has increased in Mexico, Canada, Kazakhstn and Turkey, attributing to a growth in gold supply.