WGC Q1 2016 Demand Trends Report

The World Gold Council yesterday released their quarterly Gold Demand Trends for Q1 2016.  As usual we summarise for you as follows:

Demand – 1,289 tonne

-       Gold demand was up 21% to 1289 tonne and marked the second strongest quarter on record after Q1 2009 (GFC)

-       Gold saw a 17% price rise over the quarter, the biggest quarterly rise in 30 years

-       Inflows to ETF’s reached a near record 363.7 tonne as negative interest rates and investors seeking security “due to the negative interest rate environment in Europe and Japan, combined with uncertainty over the Chinese economy, anticipation of slower interest rate rises in the US and global stock market turmoil.”

-       Global investment demand was 618 tonne, up 122% year on year and 201% on last quarter

-       Jewellery saw a 19% drop off a combination of poor consumer confidence in the face of a weakening Chinese economy and a 42 day strike by Indian jewellers in protest of proposed further Government restrictions and exacerbated by the higher price.  They believe Q2 will see that largely recovered due to pent up demand

-       Technology demand weakened further, down 3% to 81 tonne, again exacerbated by higher prices

-       Central Bank buying dipped slightly to 109 tonne compared to 112 tonne, but clearly the world’s central banks continue their unabated buying since the GFC – this the 21^st consecutive quarter of net purchases.

Supply – 1,135 tonne

-       Total supply was up 5% to 1,135 tonne.  Mine supply was up 8% to 774 tonne and hedging was up to 40 tonne, whilst recycling continued its downward trend.

As we’ve written before these figures need to be taken with a little grain of salt as they don’t appear to reflect the true consumption out of China via the SGE.  That said, Chinese consumption has eased a little this year as we report in today’s podcast.

Oh…. and for those mathematically challenged… Supply of 1,135 less Demand of 1,289 is yet another supply/demand deficit….