World gold demand at 973.5 tonnes in the first quarter of this year was the lowest in the same quarter since 2008, the World Gold Council (WGC) said, due to a fall in investment demand for gold bars and gold-backed ETFs, partly due to range-bound gold prices.
Jewellery demand was steady at 487.7 tonnes, as growth in China and the US compensated for weaker Indian demand, it said in its latest report, adding that rising local gold prices, exaggerated by currency weakness, produced a weak quarter in India. However, this was countered by growth in China, where demand was boosted by holiday shopping.
The United States saw the highest Q1 jewellery demand since Q1 2009.
Central banks bought 116.5t of gold, up 42% year-oon-year, while technology demand extended its recent upward trend, growing 4% year-on-year to 82.1 tonnes.
The total supply of gold increased by 3% to 1,063.5 tonnes, primarily due to a modest increase in producer hedging. Mine production was fractionally higher at 770 tonnes, the WGC said.
China, Germany and the US drove weakness in bar and coin investment. Global demand fell 15% to 254.9 tonnes as range-bound gold prices undermined investor interest.
ETFs saw a fifth consecutive quarter of inflows. Holdings grew 32.4 tonnes, due to growth in US-listed funds. Q1 investment was mixed, with rising interest rates on the one hand and a sharp spike in stock market volatility on the other.
Global jewellery demand was roughly flat at 487.7 tonnes. China was buoyed by holiday spending and the supportive economic backdrop improved US demand. By contrast, Indian consumers were discouraged by rising local gold prices.
Central banks added 116.5 tonnes to global official reserves in Q1. This was the highest Q1 total for four years and in line with long-term average quarterly purchases of 114.9t since Q1 2010.
Demand for gold in the technology sector continued to improve. The wireless sector was a key area of growth as facial recognition is increasingly deployed in smartphones, gaming consoles and security systems.