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Gold demand falls in the Middle East and India as it surges elsewhere(CPI Financial Via Acquire Media NewsEdge) Total demand in India, traditionally the world's largest gold market, declined significantly under pressure from record rupee prices and a major deterioration in the domestic economy. Demand fell 83 per cent on year earlier levels to just 17.7 tonnes. Industrial demand for gold in Q1'09 was 31 per cent down on Q1'08, with the electronics sector being the major contributor to this decline. End user demand for electronic goods has been badly affected by the downturn in consumer spending on items such as laptops and mobile phones. Demand in the Middle East in Q1'09 was down 26 per cent on Q1'08 to 53.6 tonnes. Both jewellery and investment recorded similar declines in percentage terms (-26 per cent to 49.5 tonnes and -28 per cent to 4.1 tonnes respectively). With 90 per cent of total consumer off take in the region in the form of jewellery, this decline was largely down to the combination of the high gold price and a tightening of consumer spending. Fears of future inflation and ongoing financial uncertainty led investors to continue to flock to gold in the first quarter of 2009, seeking out its proven wealth preservation qualities, according to the latest statistics from the World Gold Council. It said that total demand for gold in Q1'09 rose 38 per cent year on year to 1,016 tonnes, representing a 36 per cent rise in value terms to $29.7 billion. According to figures published by World Gold Council (WGC) in its Q1'09 Gold Demand Trends report, identifiable investment demand for gold, which includes exchange traded funds, (ETFs) and bars and coins, was the major source of growth in the quarter, reaching 596 tonnes, up 248 per cent on Q1'08. The figures, compiled independently for WGC by GFMS Limited, reveal a record level of investment into ETFs with demand soaring 540 per cent to 465 tonnes at a value of $13.6 billion. Net retail investment (total bar and coin demand) remained highly robust, rising 33 per cent year on year to 131 tonnes, despite some bar and coin dishoarding in eastern markets as investors took profits. Germany was the single biggest bar and coin market in Q1'09, where demand rose 400 per cent on Q1'08 to 59 tonnes, with inflation concerns being a key buying motivator. Switzerland was the second largest bar and coin market, up 437 per cent to 39 tonnes on Q1'08, followed by the US, rising 216 per cent to 27.4 tonnes. The impact of the recession on consumer discretionary spending continued to take its toll on both jewellery and industrial demand. Gold jewellery demand was down 24 per cent on year earlier levels, with most countries suffering a decline as consumers responded to the high and volatile gold price, which reached record levels in some countries, compounded by difficult economic conditions. China bucked this trend recording a positive three per cent growth in jewellery demand. This reinforces the view that China's economy, although unquestionably suffering from a sharp deceleration, nonetheless remains resilient relative to most other nations. In the US, total demand for gold was 15 per cent higher than in Q1'08 at 55.2 tonnes, driven by retail investment demand which rose 216 per cent to 27.4 tonnes. Conversely, difficult economic conditions continued to weigh heavily on jewellery demand, which fell 30 per cent to 27.8 tonnes. Total supply surged 34 per cent on the same quarter last year to reach 1,144 tonnes in Q1'09. With a 55 per cent increase on Q1'08 to 558 tonnes, the primary source of the increase was scrap gold coming back into the market as high prices and difficult economic conditions encouraged record levels of recycling. Also contributing to the increased supply was a sharp slowdown in the levels of producer de-hedging (from -129 in Q1'08 to -10 in Q1'09). Mine production was relatively stable, increasing by just 3 per cent to 560 tonnes while lower levels of central bank sales, which fell 54 per cent to 35 tonnes, had a dampening effect. © 2009 CPI Financial. All rights reserved. Provided by Syndigate.info an Albawaba.com company (c) 2009 CPI Financial. All rights reserved. |