Demand for gold plunges after Donald Trump win

The World Gold Council has reported that European jewellery demand was dragged down in Q1 by weakness in France and the UK.

When see from a value perspective, the demand increased 18 percent to Rs 32,420 crore from Rs 27,540 crore in in the corresponding period previous year, according to the World Gold Council (WGC) that released its "Gold Demand Trends" report on Thursday.

The World Gold Council stopped short of calling it a slide in demand, saying the difference on the year is especially pronounced due to record-high demand one year ago.

Investment in gold bars and coins increased 9% year-on-year, while jewelry demand was steady at 480.9 tonnes.

Moreover, as James Luke, manager of the Schrdoer ISF Global Gold fund, points out, gold has also in the past proved its worth as an effective inflation hedge, and given the printing of money by the world's central banks in the course of quantitative easing programmes, there is every reason to argue that higher inflation is coming in the future. This was down 27% on Q1 2016.

"Demand is down year-on-year, but that is largely because Q1 last year was exceptionally high".

He adds: 'Although we did not see the record-breaking surges in ETF inflows experienced in the first quarter of 2016, we have seen good inflows nonetheless this quarter, with strong interest from European investors ahead of the Dutch and French elections'.

The WGC kept its forecast for India's full-year demand at 650 tonnes to 750 tonnes, lower than a 10-year average of 845 tonnes, but just above last year's level. India's demand for gold in this very period rose from 79.8 tonne to 92.3 tonne, up 16%, or 12.5 tonne, which is almost double than the global increase. "This was led by China with demand for bar and coin rising 30%, reaching beyond 100 tonnes for the fourth time, driven by the concerns over potential weakness in currency and a frothiness in property market", said Hewitt. The estimated lower demand is attributed to the operational issues that the small jewellers, who account for two-thirds of India's gold industry, may face due to the roll out of GST. "It signals both a return of optimism and the resilience of this industry that has been living with some tough challenges since 2013", WGC Managing Director, India, Somasundaram PR told PTI here. Gold Demand Trends data can also be explored using our interactive charting tool http://www.gold.org/supply-and-demand/interactive-gold-market-charting. Meanwhile, gold ETFs saw flows accounting for 109 tonnes but largely concentrated in Europe.

  • Zachary Reyes