Gold Investment Demand Grows in Q1 2015 (Video)

The World Gold Council (WGC) released its Gold Demand Trends report for the first quarter of 2015. The WGC considers 2014 a year of stabilization for the gold market, and the the first quarter of the year saw this trend continue. The supply-demand picture for gold remained relatively unchanged. However, looking to the rest of 2015, the WGC sees supply subsiding. At the same time, demand could rise as investors adjust their strategies in response to weak economic growth in the West. In fact, the first three months of 2015 already saw a noticeable increase in gold investment demand:

ETFs (+26 tonnes) benefited from improved Western investor attitudes towards gold; Q1 2015 was the first quarter of positive net purchases since Q4 2012. Bar and coin demand, 10% weaker year-on-year, remains elevated compared with historical levels.

In this video interview, WGC’s Head of Market Intelligence Alistair Hewitt summarizes the report’s findings.

Highlights from the video:

“The first three months have been very stable. We’ve seen demands at 1,079 tons – just 11 tons down on the same period last year. That’s just a dip of 1%. If we have a look at some countries, we see in India we’ve seen demand increase by 15% year-on-year. That’s largely a function of the very low demand we saw in Q1 2014. If you recall, this time last year, we had the import restrictions in place, and we had the election looming. If we turn towards China, demand there is down by 7% at 273 tons. This is a function of an unusual combination. On the one hand, we’ve got incredibly buoyant stock markets. Then on the other hand, we’ve got economic uncertainty…

“Investment demand increased by 4%, reaching 279 tons. Within that, exchange-traded funds saw their first positive inflows since Q4 2012, as Western investors’ attitudes toward gold became more benign and bearish sentiment subsided a little bit. If we look at the bar and coin market, bar and coin demand was down 10% year-on-year. This was largely a result of very buoyant stock markets in a number of countries…

“Central banks have been buying for five years. At a quarterly level, they’ve been consistent net purchasers for 17 quarters. We expect this theme to continue throughout 2015…

“I don’t see [mine production] continuing for the whole year. I think we’ve seen a 2% increase in Q1. That’s largely a function of a number of projects that were started a long time ago coming on-line now. I think over the course of the year we’re going to see around about 20 new projects come online, but they’re reasonably small. Each of them will only add about a ton each. Set against that increase, we’re going to see a continued decline in a number of the larger, more established mining operations. Overall, we think 2015 mine productions is going to be pretty much flat on 2014…

“I think India and China are going to continue to be incredibly important parts of the global gold market…”

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