Gold demand posts weakest yearly start since 2008, as prices stagnate: WGC

Gold demand posted its weakest start to the year in a decade, the World Gold Council (WGC) said on Thursday, as prices of the metal stagnated and the threat of rising interest rates led investors to seek better returns elsewhere.

Global gold demand totaled 973.5 tons in the January to March period, down 7 percent year-on-year and the weakest first quarter since 2008. That coincided with a period of calm in the gold market, which saw prices hold within their narrowest range of any quarter in more than a decade.

“The rangebound gold price has certainly had an effect on investor sentiment,” said Alistair Hewitt, the WGC’s head of market intelligence.

“It works both ways – for people in the retail space, a price drop can be an entry point, and if the price is rising, people want to take advantage of that momentum.”

The biggest drop in demand came from the investment sector, with bar and coin consumption down by 15 percent and buying of gold-backed exchange-traded funds two-thirds lower year-on-year.

Chinese jewelry demand rose 7 percent to 188 tons, which Hewitt attributed to strong seasonal buying and a better product range. “It really stems from [jewelers] becoming better at meeting the needs of the Chinese millennials,” he said. “We’re seeing more 18 carat jewelry, more 22 carat jewelry, better designs, better products.”

Coin and bar demand in China was down 26 percent.

Global jewelry consumption was also soft, edging down 1 percent. Buying in India, the second-biggest gold jewelry consumer after China, posted its third-weakest quarter in a decade, falling 12 percent yearon-year to just under 88 tons.