Jewellery sales push gold demand in second quarter

A robust demand from the jewellery, retail investment and industrial sectors has pushed the global demand for gold to a new height in the second quarter of the current calendar year.

Global demand for gold jewellery showed the strongest surge, reaching a record of $14.5 billion in the second quarter, 37 per cent up compared with the same period last year. The main growth came from key markets of China, India, West Asia and Turkey.

A return to normal levels of gold price volatility, growing acceptance by consumers of a price that averaged 6 per cent above the price during the year-ago period and strong economic performances in key consuming regions helped gold set a record in the second quarter, according to Gold Demand Trends released today by the World Gold Council (WGC).

In tonnage terms, India, the world's largest gold market, achieved an all-time record in both jewellery and retail investment. Turkey stood second in both the categories, while Russia recorded its highest-ever level of jewellery demand.

James Burton, the chief executive officer of the World Gold Council, said, "A reduction in price volatility in 2007, coupled with a greater industry marketing activity, has resulted in increased consumer confidence and led to record levels of gold jewellery purchases globally in dollar terms." He further added that figures from India were particularly pleasing.

Demand from India during the quarter under review was 317 tonnes. It is equivalent to half of the global mine output for the period.

More stable gold prices, a booming economy and the increasingly successful Akshaya Thritiya festival in April were the contributing factors for the strong quarterly performance of the domestic gold market. Prices of gold are currently ruling high at around $652 an ounce.

In West Asia, strong economies and stable prices influenced the demand for gold, which rose 20 per cent in tonnage terms to 97.5 tonnes in comparison to the corresponding quarter last year. Turkey enjoyed the second-quarter records for jewellery at 52.2 tonnes and net retail consumption at 20.5 tonnes, an increase of 14 per cent and 5 per cent respectively.

The global net retail investment rose by 51 per cent in tonnage terms to 132.9 tonnes and 60 per cent in dollar terms to $2.9 billion. The global industrial demand saw a further steady increase over the year-earlier level of 2 per cent in tonnage terms to 116.5 tonnes.

It was equivalent to a 9 per cent increase in value terms to $2.5 billion, which is a new quarterly record. The electronics demand, which grew strongly in 2006, also recorded a further 2 per cent increase in tonnage during the quarter.

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ALL GLITTERS

Global demand for gold in dollar terms reached the highest at $14.5 bn in Q2 2007

Main growth drivers were China, India, West Asia and Turkey

Demand from India is equivalent to half of global mine output during the quarter at 317 tonnes

Robust demand in jewellery, retail investment and industrial sectors

Global net retail investment was up 51 %