Global gold demand jumps 15%

Dubai - Poor demand across the Middle East, demand in Egypt hit a record low

Global demand for gold jumped 15 per cent in the second quarter but fell in major markets such as India and China.
The Middle East was no exception as the region witnessed 20 per cent decline in terms of weight and 16 per cent in dollar value, the World Gold Council said in its report on Thursday.
Challenging geopolitical and economic conditions continue to hamper the Middle Eastern markets, the council said. The high price level has taken its toll on the jewellery sector in the region, it added. Prices jumped by about one quarter in value during the first half.
Globally, the total gold demand stood at 1,050 tonnes in April-June period, showing an increase of 15 per cent compared with the second quarter of 2015. So first-half demand jumped to 2,335 tonnes - which was the second highest level for that period and not far from the record 2,371.5 tonnes seen in 2013.
"Investors sought risk diversification and a safe store of value in the face of continued political, economic and social instability," the WGC said.
Investment demand surged 141 per cent to 448 tonnes in the second quarter. Jewellery demand dropped 14 per cent to 444 tonnes - with heavy falls in key markets China and India - and central bank purchases also slid.
But over the course of the first half, investment demand leapt to a record 1,064 tonnes, stimulated by soaring prices. "2016 has unleashed a variety of events creating economic and political uncertainty," the Council said in its latest Gold Demand Trends report.
The US election, the UK referendum on EU membership and possible implications of the Brexit outcome, the increasingly parlous state of Italy's banking sector; these have proved a potent combination as far as gold investors are concerned.
"A number of factors turned the attention of the western investor community towards gold in the opening months of the year - and brought it even more sharply into focus in the second quarter," the WGC added. Demand across the Middle East was, unsurprisingly, poor given the environment of high gold prices, relatively low oil prices and continued geopolitical unrest. Demand in Egypt hit a record low of 5.3 tonnes. The domestic currency remains very weak, following the devaluation in March making local gold prices punitively high for many consumers.
In contrast to the surrounding markets, demand in Iran continued to improve on the wave of optimism sparked by the removal of sanctions last year. Demand grew 10 per cent in Q2 (to eight tonnes), taking half-yearly demand to 17.9 tonnes.
Middle Eastern bar and coin demand slides to seven-year low Iran was again the only bright spot in an otherwise very dismal picture for Middle Eastern investment demand. Demand in most markets across the region was affected by the high and sharply rising gold price; ongoing political instability; continued pressure on revenue from relatively weak oil prices; and sliding tourist numbers.
- abdulbasit@khaleejtimes.com