Global Gold Demand Falls 7% in Second Quarter, World Gold Council Report Says

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Researched by Industrial Info Resources (Sugar Land, Texas)--The global gold demand fell 7% in the second quarter as there was a decrease in demand for gold in investments and jewelry, and concerns about the global economic environment. According to the World Gold Council's "Gold Demand Trends Report," global gold demand in the second quarter of 2012 was 990 tons, down 7% from the 1,065.8 tons in the second quarter of 2011. Investment demand for gold fell 23%, and jewelry decreased 15% in the same period.

"This dip in demand was partly due to the comparison with exceptional demand last year, and also reflects the challenging global economic climate," the report stated. "In this context, gold performed as expected, acting as both a store of value and a source of liquidity."

In value terms, gold demand remained relatively stable year-over-year at $51.2 billion, compared to $51.6 billion in second-quarter 2011. During the quarter, the average price of gold was $1,609.49 per ounce, 7% higher than the average for second-quarter 2011, and 4.7% lower than the first quarter.

With continuing buying from the central banks, official sector gold demand hit a record high at 157.5 tons. This was more than double the 66.2 tons of gold purchases made in the same period of 2011 and accounted for 16% of overall second-quarter gold demand. World investment, including gold bars, coins and exchange-traded products, fell to 302 tons by June.

In the latest quarter, total Indian demand was 181.3 tons. This amount was 25% more than China's, the biggest buyer the previous two quarters. The World Gold Council predicts that China will become the leading consumer this year on an annual basis, with the country's demand reaching almost 850 tons, versus about 700 tons for India. Mine output rose 0.4% to 706.4 tons in the second quarter from a year earlier.

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