Gold in Demand … Not So Much

The latest report of the World Gold Council (WGC) stated that as prices grew firm after the circumstances that occurred last year, the similar period, the demand for Global gold (CEC:Commodities Exchange Centre: @GC.22) declined.

There was a 964 ton demand of bullion during second quarter which was down on year by 16 percent. The demand had a total of 1,148.3 tons as stated by the report on Thursday. Keeping in mind the prevailing market conditions, this decline did not come as a shock but instead was predicted.

The report published that during the period of April-June, there was a drop in gold prices by 25 percent which caused a drastic increase in the demand of gold which was described as an event that took place only once a generation.

The decline in 2Q13 price was due to the outflows of the exchange funds since investors saw the tapering that occurred by the Federal Reserve that diminished the expectations of inflation. The volatility of gold prices on the other hand was below average.

In 2Q14, the demand for jewelry, which accounted for nearly half of the demand of gold, fell by a third while coin and bar investment tumbled to lesser than half of the 2Q13 levels.

The majority of the decline in jewelry was in the Middle East and Asia although western markets like U.S and U.K. saw gains, excluding Italy.

India and china were blamed by WGC for the decrease in coin and bar investment as Indian investors were banned on importing coins and the Chinese were busy with price direction lacking and the after affects of last year’s purchases.

Keeping in mind the declines, the WGC stated that the demand for both of the segments was better in line now.

Thursday’s market saw gold being traded at a value of $1,313 per ounce.

The demand for jewelry is below by 2 percent in the quarterly average of five years. The demand for coin investment and gold bars decreased to 20 percent on a quarterly average for a five year period but is still intact as it is in the higher range even after the financial crisis occurring globally.

Investment vehicles experienced moderate outflows keeping in mind ETFs. This was around 39.9 tons which was a huge improvement considering the amount in the same period last year which was 402.2 tons.

In the second quarter, the buying power of central bank was at 117.8 tons.

There was a 28 percent increase in 2Q14 by year as uncertainty prevailed in the geopolitical realm.

The biggest purchasers in the quarter, of gold were Russia, Tajikistan and Kazakhstan.

Mine production on the supply side increased in the current year’s first half. Compared to the first half of the last year, an extra amount of gold at 58.2 tons was produced. WGC predicts that this growth rate will slow down in the future quarters.

The report stated that mine supply has well increased and will reach a level in the next 4-6 quarters.

Gold was traded at $1,313/ounce on Thursday.