India gold demand up 15%, global demand dips 18% in Q1 2017: World Gold Council
India gold demand rises on back of RBI remonetisation and wedding season, global demand dips due to slowdown in ETF inflows
Mumbai: Global gold demand in first quarter of 2017 slipped 18% from a year before, due to a slowdown in inflows in exchange-traded funds (ETFs), and a drop in demand from central banks, according to the World Gold Council (WGC).
In a report on Thursday, WGC said that the global demand in the March quarter totaled to 1,034 tonnes , a decline of 18% compared to the record Q1 in 2016.
Inflows into ETFs totalled 109, which, although solid, were nonetheless a fraction of last year’s near-record inflows. Slower central bank demand also contributed to the weakness. Bar and coin investment, however, was healthy, at 290 tonnes, an increase of 9% year-on-year, while demand firmed slightly in both the jewellery and technology sectors.
Meanwhile, first quarter jewellery demand was 481 tonnes, marginally up from a year before, due to gains in India . However, demand remains relatively weak in a historical context, 18% below the 5-year quarterly average.
Indian consumers enjoyed a period of relative stability in the domestic market, lifting demand 15% year-on-year to 124 tonnes. Continued remonetisation by the Reserve Bank of India buoyed consumer sentiment, which encouraged demand ahead of the auspicious wedding season, albeit from a low base.
“Demand is down year-on-year, 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,” said Alistair Hewitt, head of market intelligence at WGC.
All was not rosy though, for the yellow metal.
“ ..central bank demand was down and 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,” added Hewitt.
Central bank demand continued to slow, with 76 tonnes added to reserves, and this was down 27% from a year ago. China’s purchasing programme was on pause during the quarter as its foreign exchange reserves remained under pressure.
Total gold supply also reached 1,032 tonnes this quarter, a fall of 12% compared with the first quarter of 2016, mainly due to 21% fall in recycling to 283 tonnes and continued net de-hedging of a further 15 tonnes by producers.