Gold demand resilient in '15 as buying spurs H2 recovery
Dubai - China and India continue their dominance in market
Global gold demand in 2015 was flat at 4,212 tonnes compared to 4,226.4 tonnes in 2014, the World Gold Council said in its annual report on Thursday.
China (985 tonnes) and India (849 tonnes) continued their dominance in the global gold market in 2015, accounting for close to 45 per cent of total global gold demand during 2015.
The gold market has been in free fall since the summer of 2011, when prices exchanged hands at its peak price of $1,920.94 a troy ounce.
Last year, gold demand growth rose towards the end of the year - fourth-quarter demand was 1,117.7 tonnes, up four per cent from the same period a year earlier.
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.
This was particularly 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.
Global investment demand for the full year 2015 grew by eight per cent to 878 tonnes from 815 tonnes in 2014. Bar and coin demand remained steady in 2015 as investors took advantage of a weaker price in Q3. The ETF market saw a slowdown in outflows: 133 tonnes in 2015, compared to 185 tonnes in 2014. Fourth quarter of 2015 witnessed a continuation of these trends with a number of key regions experiencing double digit growth.
Overall jewellery demand for the full year 2015 was down three per cent to 2,415 tonnes from 2,481 tonnes in the previous year. Following a slower start to the year, the third and fourth quarters combined produced the strongest second half-year total for gold jewellery in 11 years. Fourth quarter of 2015, saw steady levels of jewellery demand, at 671 tonnes compared to 677 tonnes in the same period last year, with retailers reporting an increase in sales around the Indian festival period.
Central Bank demand for the full year 2015 saw a small uptick from 584 tonnes in 2014 to 588 tonnes in 2015 as the need for further diversification was reinforced by a tumbling oil price and reduced confidence in the global economy. Demand in Q4 continued to be strong, up 25 per cent to 167 tonnes from 134 tonnes in Q4 2014, making this the 20 consecutive quarter of net purchasing.
Gold demand in Q4 showed further positive signs, following a strong third quarter. In India both the investment (60 tonnes) and jewellery (173 tonnes) sectors were up six per cent, boosted by the festival season. In China, which has witnessed economic turmoil, consumer uncertainty and currency weakness, gold demand held up well, particularly in the investment sector up 25 per cent to 48 tonnes for the quarter.
Alistair Hewitt, head of Market Intelligence at the World Gold Council, 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."
"Looking ahead, 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 stockmarkets have wobbled, gold has performed well."
Total supply for the year experienced a drop of four per cent to 4,258 tonnes for the full year 2015 compared to 4,414 tonnes in 2014.