WGC: Global gold supply surplus narrows to 90.3 t in Q1
Source: Mysteel
May 07, 2019 17:30
The council noted that gold demand in Q1 can be stated as to 1,059.7 tonnes – equal to a 8% rise on year – if demand for gold for jewellery consumption is replaced with jewellery fabrication when calculating total gold demand. Slight differences between the two terms emerge as the consumption volume will be impacted by “imports/exports and stocking/de-stocking by manufacturers and distributors”, WGC noted.
The rises in demand are partly thanks to the fact that net purchases of gold among central banks during January-March reached 145.5 tonnes, higher by a sizzling 68% on year and making for the largest global reserve volume for any Q1 since 2013. Meanwhile, gold demand from ETFs and similar products surged 49% on year to 40.3 tonnes.
Central banks continued to accumulate gold after their net purchases increased to a 50-year high in 2018, mainly due to economic uncertainties driven by trade friction, sluggish growth and a low negative interest-rate environment, WGC said.
At the same time, demand for the metal for jewellery and for fabrication into bar and coins – the two leading gold consumption sectors – only witnessed comparatively small corrections over the three months, with the former picking up 2% on year to 536.8 tonnes and latter losing 1% on year to 257.8 tonnes. The two items accounted for some 75% of total demand.
The council attributed the increase in jewellery demand for the metal to stronger demand in India. Local jewellery demand there increased 5% on year to 125.4 tonnes, or the highest Q1 result since 2015, thanks to a lower rupee gold price in late February and early March, traditionally regarded as the ‘gold-buying wedding season’.
In Q1, the gold price averaged $1,303.8/ounce, some 6.3% higher on quarter or 2% down on year, according to WGC statistics.
On the other hand, gold supply reached 1,150 tonnes over the first quarter, lower by 3.1 tonnes on year. In Q1, mine production picked up 1% on year to 852.4 tonnes, the highest Q1 result on record. Moreover, Q1 output is typically the weakest for the year so the January-March result represents a strong start for 2019, Mysteel notes.
At the same time, the volume of gold recovered through recycling also rose by 5% on year to 287.6 tonnes, but the rises in output and gold recycling were offset by declining net hedging, which dropped 72% on year to 10 tonnes.
Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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