Physical gold shines, consumer purchases hit record in 2013

KUALA LUMPUR: The year 2013 turned out to be a bumper year for physical gold as consumers around the world bought the yellow metal in record amounts, with China and India leading the way, report the World Gold Council.

Last year, China became the world’s biggest gold market, overtaking India for the first time and setting a new record for jewellery, bar and coin demand of 1,065.8 tonnes.

This was the first time it had broken the 1,000-tonne mark for the first time as consumers responded to lower gold prices.

In Western markets, consumer demand also remained strong with the US, in particular, having a robust year in the jewellery, bar and coin sectors, according to the latest World Gold Council Gold Demand Trends report.

However, while the gold market saw 21% growth in demand from consumers, outflows from ETFs (exchange traded funds or paper gold) came to 881 tonnes. The net result was that global gold demand in 2013 was 15% lower than in 2012, with a full year total of 3,756 tonnes.

Annual global investment in bars and coins reached 1,654 tonnes, up from 1,289 tonnes in 2012, a rise of 28%, and the highest figure since the World Gold Council’s data series began in 1992.

For the full year, Chinese and Indian investment in gold bars and coins was up 38% and 16%, respectively. Although much smaller markets in terms of volume, in the US, bar and coin demand was up 26% to 68 tonnes, and in Turkey it was up 113% to 102 tonnes.

Meanwhile demand for jewellery – the other component of consumer demand – increased by 29% from 519 tonnes to 669 tonnes in China, and by 11% from 552 tonnes to 613 tonnes in India, reaching 2,209 tonnes globally – the highest figure seen since the onset of the financial crisis in 2008.

Marcus Grubb, Managing Director, Investment Strategy at the World Gold Council commented: “Twenty-thirteen has been a strong year for gold demand across sectors and geographies, with the exception of western ETF markets. Specifically, it was the year of the consumer. Although demand has continued its shift from West to East, the growing demand for gold bars, coins and jewellery is a global phenomenon.

“Taken together, the statistics demonstrate the resilience of the gold market and the unique nature of gold as an asset class, rebalancing to reflect the economic environment.”

The key findings of the World Gold Council report for 2013:

1) Consumers remain key drivers in the demand for gold. Globally, consumers bought 3,864 tonnes of gold, 21% higher than in 2012. Jewellery demand for the year rose 17% to 2,209 tonnes, while investment in bars and coins was up 28% to 1,654 tonnes.

2) China and India both recorded increased demand in 2013. Consumer demand in China rose 32% in 2013 to a record level of 1,066t, while in India demand rose 13% to 975t.

3) Global consumer demand strengthens. Across the world there were large increases in consumer appetite for gold in both emerging and developed markets. Demand in Turkey was up 60%, Thailand up 73% and the US up 18%.

4) Indian demand remained strong despite several import-related curbs last year. Gold demand remained buoyant, with a full-year total of 975 tonnes compared to 864 tonnes in 2012. The WGC thinks unofficial imports almost doubled compared with 2012.

5) Central banks’ purchase of gold was down 32% from 2012, but they continued to be strong buyers of gold, a trend which began in 2009. Last year the net purchases in all four quarters, totalled 369 tonnes, meaning 12 consecutive quarters of net inflows.

7) Technology demand reached 405t in 2013, virtually unchanged from the figure of 407t in 2012.

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