Global gold demand flat in 2015 despite strong H2 recovery: WGC

Global gold demand in 2015 was flat at 4,212 tonnes compared to the previous year, according to the World Gold Council’s Gold Demand Trends report.

The overall global demand during 2014 stood at 4,226 tonnes, the WGC report said.

It said despite a challenging start to the year, gold demand rebounded in the second half of 2015, as a result of sustained buying from central banks and a strong second half from China and India.

Bar, coin purchases

This was evident in the retail investment sector, where bar and coin purchases were led by China and Europe, with strong support from the US as investors took advantage of weaker prices amid a softening economic backdrop, financial turbulence and ongoing geopolitical tension, the report said.

“In a year that saw global economic and stock market turmoil, the first US interest rate rise in nine years and falling oil prices, demand for gold remained resilient, coming in at 4,212 tonnes for the full year.

Official sector purchases, combined with strength in the Asian markets and continuing momentum in the US and Europe, reinforced gold’s credentials as a portfolio diversifier, a wealth preservation tool and a hedge against a range of risks,” WGC Head of Market Intelligence Alistair Hewitt said.

Physical demand

Looking ahead, he said, physical demand will continue to be supported by strong central bank purchases and continued buying of jewellery, bars and coins by households across the world, led by India and China.

“If we just look at the year to date, the investment case for gold is as strong as ever. While stock markets have wobbled, gold has performed well,” he added.

Global investment demand

The report further revealed that global investment demand for the full year 2015 grew 8 per cent to 878 tonnes from 815 tonnes in 2014. Bars and coins demand remained steady in 2015, as investors took advantage of a weaker price in the third quarter, it said.

The Electronic Traded Fund (ETF) market saw a slowdown in outflows, 133 tonnes in 2015, compared with 185 tonnes in 2014.

Jewellery demand

Meanwhile, the overall jewellery demand for 2015 was down 3 per cent at 2,415 tonnes from 2,481 tonnes in the previous year.

Following a slower start to the year, the third and fourth quarters together produced the strongest second half-year total for gold jewellery in 11 years.

In Q4 of 2015, there was a steady level of jewellery demand at 671 tonnes compared with 677 tonnes in the same period last year with retailers reporting an increase in sales in the Indian festival period.

In 2015, the WGC said, Central Bank demand saw a small uptick from 584 tonnes in 2014 to 588 tonnes in 2015 as the need for further diversification was reinforced by a declining oil prices and reduced confidence in the global economy.

The Central Bank demand in Q4 continued to be strong, up 25 per cent at 167 tonnes against 134 tonnes in Q4 2014, making this the 20th consecutive quarter of net purchasing.

Total supply

The report further revealed that the total supply for the year saw a drop of 4 per cent at 4,258 tonnes in 2015 compared with 4,414 tonnes in 2014.

This, it said, is reflective of both recycling hitting multi-year lows and mine production growth falling to its lowest level since 2008.

Mine production

Mine production contracted in Q4, the first quarterly contraction since 2008, as cost cutting took effect.

In the last quarter of 2015, there was a substantial decline of 10 per cent at 1,037 tonnes compared to 1,152 tonnes in the same period of 2014, as primary production slowed as a result of weaker gold prices, mine closures and project delays, it added.