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Physical demand for gold in Q2 down 14pct but supply increases

http://www.bulliondesk.com/gold-news/focus-physical-demand-for-gold-q2-down-14pct-but-supply-increases-gfms-98419/

Physical demand for gold contracted by 14 percent in the second quarter of the year, according to the latest Gold Survey report from GFMS.

Physical demand totalled 858 tonnes in the second quarter, down 14.2 percent year-on-year and down 15.5 percent from the first quarter. Overall global gold demand was its lowest since 2009.

“Almost all major physical gold markets suffered in the second quarter as demand for bars and coins fell another 12 percent year-on-year and were some 63 percent below the Q2 2013 peak,” GFMS said.

In China – which vies with India as the world’s largest consumer – demand continues to underperform analysts’ estimates. China’s gold jewellery consumption in the second quarter at 101.0 tonnes was down 23.2 percent year-on-year and down 40 percent from the first quarter.

“China’s jewellery demand has been lacklustre so far in 2015, partly due to a weaker domestic economy, and partly due to a strong equity market in the first five months of the year, which absorbed most of the capital and savings that any retail investors could have mustered,” the report said.

In India, however, jewellery consumption increased 2.5 percent year-on-year to 148.2 tonnes, driven by strong purchasing through the Akshaya Tritiya festival and wedding-related buying.

In other major markets, in the world’s fourth largest consumer – Turkey – demand dropped by 39 percent year on year to 12.5 tonnes. In Russia, demand was down 12.5 percent to 15.0 tonnes, though American demand was up 12.7 percent at 26.5 tonnes.

Official sector buying added to the negative narrative – purchases were down 61.9 percent at 45 tonnes in the second quarter, GFMS estimates, also down significantly from the 135 tonnes seen in the first three months of the year.

On the supply side, mine production was up 1.8 percent year-on-year at 773 tonnes in the second quarter and up from 729 tonnes in the first quarter.

Scrap supply also increased by one percent at 270 tonnes, though down marginally from the 285 tonnes seen in the first quarter of the year.

Overall supply of 1,054 tonnes was down 2.9 percent year-on-year, primarily due to the 82.6 percent decline in net hedging supply at just 10 tonnes.