Pham-Duy Nguyen, Bloomberg
Seattle: Gold demand rose 4% in the first quarter as steady prices sparked purchases from Vietnam, China and India, the producer-funded World Gold Council said.
Global demand increased to 832 metric tons from 798 tons a year earlier, the London-based industry group said today in a statement. Purchases for jewelry jumped 17% to 573 tons as consumers grew more comfortable with gold above $650 (Rs26,494) an ounce, the council said.
“People bought more because the volatility was reduced,” George Milling-Stanley, the council’s manager of investment and market analysis, said in an interview. “When the price is exceptionally volatile, then consumers in the developing world tend to hold back.”
Gold traded at an average $649.58 an ounce in London in the first quarter, swinging from a low of $602.46 on 5 January to a high of $688.64 on 27 February. The historical volatility of gold, or the rate at which a price moves up and down, was 16.7% during the quarter. A year earlier, the rate was 20.1%.
Gold for immediate delivery traded as high as $673.89 yesterday in London. The metal has gained 5.6% this year and reached a 26-year high of $730.40 last May.
Total gold demand fell 18% during the first quarter from the previous one. In India, the biggest buyer of gold, demand jumped 50% from a year earlier to 211 tons. China’s investments in gold climbed 31% to 90 tons.
Vietnam saw the biggest increase in gold demand, with consumers buying twice as much as a year earlier. Jewelry purchases in Vietnam rose 14% to 6.5 tons and retail investment quadrupled to 16 tons.
“Many people in Vietnam don’t have confidence in the currency, so that’s why we think jewelry demand and investment demand will continue to grow,” Milling-Stanley said. “They mirror the pattern in many developing markets.”
Demand fell the most in the U.S., dropping 9% from a year earlier to 60 tons.
Investment in exchange-traded funds slid 68% to 36 tons, the biggest quarterly drop since the second quarter of 2005. Bar and coin investment rose 31% to 116 tons.
Gold supply fell 2% to 808 tons as the amount from mines climbed 1% to 580 tons. Central bank sales rose 2% to 95 tons and gold producers bought back 129 tons to eliminate hedge positions, the most since the second quarter of 2006.