Global gold demand drops 18% in Q1 2017: WGC

In its latest report published on Thursday, the World Gold Council (WGC) noted that global gold demand declined by 18% during the first quarter of 2017 to 1,034 tonne, when compared to 1,262 tonne in Q1 2016.

WGC Head of Market Intelligence Alistair Hewitt said, “Demand is down but that is largely because Q1 last year was exceptionally high. Although we did not see the record-breaking surges in ETF inflows experienced in Q1 2016, we have seen good inflows nonetheless this quarter, with strong interest from European investors ahead of the Dutch and French elections." 

Key Points:

Slower central bank demand also contributed to the weakness with 76 tonne added to the reserves from 104 tonne in Q1, 2016.

This was down 27 per cent on Q1 2016. China's purchasing programme was on pause during the quarter as its foreign exchange reserves remained under pressure.

Retail investment demand is strong too, up 9 per cent year-on-year with demand at over USD 11 billion in Q1. China led the way with bar and coin demand surging 30 per cent, breaching 100 tonne for only the fourth time on record, fuelled by concerns over potential currency weakness and a frothy property market.

Gains in India were the main reason for the slight increase. But demand remains relatively weak in an historical context, 18 per cent below the 5-year quarterly average.

Jewellery demand is still in the doldrums, although there are signs of improvement, especially from India where the gradual remonetisation of the economy is supporting the jewellery market.

Iran’s gold jewelry demand climbed to a four-year high in the first quarter, as the rest of the Middle East was hurt by low oil prices.

 Iran’s jewelry demand climb 27 percent from a year earlier to 12.9 metric tons in the first three months this year, the World Gold Council said in a report Thursday. Iran’s gold bar and coin demand was 3.7 tons, the most for the region, compared with sales of 0.3 ton.

Total Middle East consumer demand, including bars, coins and jewelry, rose 5 percent to 64.5 tons, the highest since the third quarter of 2015

In Saudi Arabia, the total dropped 13 percent to 14.2 tons while Egypt’s consumption declined 14 percent to 6.2 tons