Iranian demand for gold jewellery surged to a near two-year high in the third quarter as sentiment improved following Tehran’s signing of a nuclear deal with world powers in July.
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“China and India remain the dominant figures in the global gold market, accounting for close to 45 percent of total demand”, said Alistair Hewitt, head of market intelligence at the industry body.
The gold market is becoming more diverse and the focus is slowly shifting away from the United States and the dollar to India and China, Hewitt said.
Jewellery buying, the largest segment of demand, was buoyant in number one consumer India, which vies for that position with China. Surprisingly, investment demand also picked up during the July – September quarter albeit by a marginal 6% at 57 tonnes in comparison 54 tonnes in the corresponding quarter previous year.
Global gold demand rose 8 per cent in the third quarter, boosted by buying from retail investors in key regions scooping up cheaper metal after it fell in price, said the World Gold Council on Thursday.
Europe also saw strong levels of demand in the investment sector as ongoing concerns surrounding the Greek debt crisis and uncertainty in Eastern Europe, the result of a number of factors including continuing tensions between Russian Federation and Ukraine and saw demand climb by 35% to 61t.
The total jewellery demand during the quarter was up 15% to 211.1 tonnes, while in value terms the increase was 7.7%, to Rs 49,558 crore.
Global investment demand saw a significant increase this quarter, up 27% to 230t. Purchases by official sector institutions reached 175 tonnes, a level nearly matching the record highs in Q3 2014, as the net widened to include new reports from countries such as China and the UAE.
“Separately, purchases by the central banks nearly equalled the Q3 2014 record as gold’s diversification benefits continue to be recognised”.
“These factors combined, illustrate the diversity of gold demand and the broad range of factors that underpin it”, he informed. “And after a long period of growth, the supply of gold from mine production contracted by 1% in the third quarter”. The U.S. and the Middle East also saw gains, up 2% to 26t and 8% to 56t respectively.
So-called “scrap” flows of gold sold by households, investors and industrial users meantime fell 6% year-on-year according to the World Gold Council data, dropping to the lowest quarterly level since Q3 2008 at 252 tonnes. Total mine supply (mine production + net producer hedging) remained relatively flat, up just 3 per cent year-on-year at 848 tonne compared with 814 tonne in the same period last year.
Demand was strongest in India, where the price of gold in rupees fell significantly which encouraged an unseasonal amount of buying. The probability that the Fed will raise rates by next month was 66 percent, compared with 50 percent at the end of October, after a Labor Department report last week showing the biggest increase in jobs this year backed the case for the Fed to act at its December policy meeting.
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Demand for gold in India for Q3 2015 was at 268.1 tonnes up by 13 percent as compared to overall Q3 demand for 2014 which was at 238.2 tonnes.
