Investment demand for gold rose 46 per cent in the second quarter of 2009, while overall demand dipped nine per cent due to rising prices and the global recession, said the World Gold Council (WGC).
Compiled by GFMS Ltd, the WGC’s ‘Q2’09 Gold Demand Trends’ report shows that while gold demand continues to be high on a historical basis, consumer demand for gold jewellery was down 22 per cent for the quarter compared to the same period in 2008. The trend is partly due to gold prices reaching near-record highs in some parts of the world.
One notable exception was China, which recorded a six per cent increase in tonnage compared to Q2’08. The growth is attributed to China’s historic low consumer demand for gold and the relative stability in the local currency and price of gold. A more resilient economy in the backdrop of the global financial crisis also contributed to China’s modest growth in demand.
Demand in India—traditionally the largest consumer of gold—tumbled 38 per cent compared to the second quarter of 2008, with jewellery demand falling 31 per cent. Overall, however, the quarter saw some recovery from the previous three months.
In the United States, retail investment demand helped boost gold off-take in Q2’09 by 10 per cent year-over-year. However, jewellery off-take in the quarter was down 10 per cent in tonnage on Q2’08 levels. These rates of decline were less severe than in the previous two quarters, which the WGC says points to stabilization in demand.
Investment demand, including exchange traded funds (ETFs) and bars and coins, increased 46 per cent to 222 tonnes, although this figure is below the highs seen during the previous three quarters when the financial crisis was at its peak.
Net retail investment, including demand for physical gold in the form of bars and coins, rose 23 per cent compared to the previous quarter and 12 per cent over Q2’08 in western countries where gold was purchased for its wealth preservation qualities.
