Global gold demand falls

Global gold demand dropped one per cent to 4355.7 tonnes in 2019 as consumption slowed in the second-half on the back of declining offtake by China India, the world's two top consumers, the World Gold Council said on Thursday.
"2019 was broadly a year of two distinct halves: resilience/growth across most sectors in the first half of the year contrasted with widespread year on year declines in the second," the WGC said in its latest Gold Demand Trends report.
However, total annual gold supply edged up two per cent to 4,776.1t. An 11 per cent jump in recycling was the main reason for the increase, as consumers capitalised on the sharp rise in the gold price in the second half of the year. Annual mine production was marginally lower at 3,463.7t - the first annual decline in over 10 years, the report said.
While investment demand rose to record levels last year, physical demand sharply declined to a nearly 10-year low due to the yellow metal's biggest price rise in 10 years.
"The gold price rallied to a six-year high in US dollar terms and hit record levels in a range of other currencies - euro, Indian rupee, Turkish lira and South African rand among them. This price strength had clear implications for gold demand across all sectors," the WGC said in its report.
In the second half of 2019, global demand was down 10 per cent on the same period of 2018 as year-on-year losses in fourth-quarter compounded, notably in jewellery demand and retail bar and coin investment, the WGC said.
In the fourth quarter, as gold price averaged $1,481 per ounce demand fell 19 per cent to 1,045.2 compared with the same quarter in the previous year which saw very strong demand.
Demand from central banks, net buyers for a 10th consecutive year, also slowed in the second half - down 38 per cent in contrast with first half's 65 per cent increase. "But this was partly due to the sheer scale of buying in the preceding few quarters and annual purchases nevertheless reached a remarkable 650.3t - the second-highest level for 50 years," the WGC said.
Precious metals analysts said as it is not just investors that are looking for a hedge against uncertainty, central banks will provide strong support for the gold market at that sector is expected to be a net buyer of gold for the eleventh consecutive year.
Together, China and India, the two gold consuming giants accounted for 80 per cent of the decline in fourth quarter jewellery and retail investment demand, down 10 per cent and 16 per cent 3316 per cent respectively, mainly due to high (and more volatile) gold prices and a softer economic environment. India's gold demand fell nine per cent to 690.4 tonnes in 2019 from the previous calendar year as record domestic prices and economic slowdown dented retail purchase, WGC said.
Alistair Hewitt, head of market intelligence at the World Gold Council, said looking ahead, he expects gold's safe-haven qualities to remain at the forefront of investors' minds as they navigate global tensions, low yields, and stretched equity valuations.
Analysts said in 2020, gold demand in India could increase to 700-800 tonnes on hopes of increased acceptance of high price level and likely economic reforms boosting consumer confidence.
Gold price in India finished 2019 just above Rs 39,000 per ten grams, almost 24 per cent higher than at the end of 2018 while the country's total gold import including through grey channels declined by 14 per cent to 646.8 tonnes in 2019 from 755.7 tonnes in 2018. Imports through grey market stood at 115-120 tonnes in 2019. Imports remained lower due to softening of local demand and 37 per cent increase in recycled gold to 119 tonnes in 2019.
- issacjohn@khaleejtimes.com