Gold demand slips from last year’s record Q1, although retail investment demand remains steady


Global gold demand in Q1 2017 was 1,034 tonnes (t), a decline of 18% compared to the record Q1 in 2016, according to the World Gold Council’s latest Gold Demand Trends report.

Inflows into Exchange Traded Funds (ETFs) totalled 109t which, although solid, were nonetheless a fraction of last year’s near-record inflows. Slower central bank demand also contributed to the weakness. Bar and coin investment, however, was healthy, at 290t, an increase of 9% year-on-year, while demand firmed slightly in both the jewellery and technology sectors.

 Inflows into gold-backed ETFs of 109t were largely concentrated in Europe. Although inflows were just one-third of the extraordinary levels seen in Q1 2016, demand was firm. European-listed products were the most popular, due to continued political fragility in the region.

Investment in gold bars and coins grew by 9%, to 290t year-on-year. Chinese investors were central to the increase, attracted by the momentum behind the price rise ahead of the seasonally-important Chinese New Year.

 First quarter jewellery demand was 481t, marginally up on Q1 2016. Gains in India were the main reason for the slight year-on-year increase. But demand remains relatively weak in an historical context, 18% below the 5-year quarterly average.

 Indian consumers enjoyed a period of relative stability in the domestic market, lifting demand 15% year-on-year to 124t. Continued remonetisation by the RBI buoyed consumer sentiment, which encouraged demand ahead of the auspicious wedding season, albeit from a low base.

Central bank demand continued to slow, with 76t added to reserves. This was down 27% on Q1 2016. China’s purchasing programme was on pause during the quarter as its foreign exchange reserves remained under pressure.

Total supply reached 1,032t this quarter, a fall of 12% compared with the first quarter of 2016. This was predominantly a result of a 21% fall in recycling to 283t and continued net de-hedging of a further 15t by producers.

The drop in recycling demonstrates a return to more normal levels, after sharp price movements drove exceptional levels in Q1 2016. Mine production of 764t was little changed from Q1 2016 (768t), and in line with the expectation that production will remain broadly steady before tailing off, the report said.

The key findings included in the Gold Demand Trends Q1 2017 report are as follows:

  • Overall demand was 1,034t a fall of 18% compared with 1,262t in Q1 2016
  • Total consumer demand increased by 4% to 771t from 739t in Q1 2016
  • Total investment demand fell 34% to 399t this quarter compared with 607t last year, as ETF inflows resumed at less exceptional levels
  • Global jewellery demand was up 1% at 481t, compared with 474t in Q1 2016
  • Central bank demand reached 76t this quarter, a fall of 27% from 104t in Q1 2016
  • Demand in the technology sector increased by 3% year-on-year, to 78t, compared with 76t during Q1 2016
  • Total supply fell by 12% to 1,032t this quarter from 1,175t during Q1 2016
  • Recycling decreased by 21% to 283t during the first quarter, from 360t during Q1 last year.



Shekhar Ghosh is consulting editor, He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at

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