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India’s Gold Demand rises while China Cools

India’s Gold Demand

India’s Gold Demand rises while China Cools

Gold Demand overall is high as Market sentiment is yet bullish because of the tension in the Middle East and also the Fiscal Cliff.  India’s Gold Demand picked up in Q3 as expected due to re-stocking, ahead of the Indian wedding and festive season Gold buying during Diwali in November. India was the world’s strongest Gold Market in the third quarter, while Chinese demand slipped due to a softer economy, the World Gold Council reported today. The result is that through the first three quarters of the year, the two countries are neck-and-neck in the race for total Gold Demand in 2012. Through the end of September, India’s Gold Demand moved back out in front at 612 metric tons, while China’s was 605. India’s Gold Demand rose 9% to 223.1 metric tons in the July-September period from 204.8 in the year-ago quarter, the WGC said in its quarterly report on trends in demand. India accounted for 30% of global consumer demand. Indian Gold Jewelry buying was up 7% year-on-year to 136.1 tons and investment demand rose by 12% to 87.0 tons.

Global Gold Demand reflects challenging global Economic climate:

The WGC Report – ETFs up 56% and India up 9% in Q3 2012.

Global Gold Demand in Q3 2012 was 1,084.6 tones (t), down 11% from the record Q3 2011 figure of 1,223.5t.   This dip in demand is in comparison with exceptional demand in Q3 last year. Gold Demand remains resilient. Q3 2012 was above the five year quarterly average of 984.7t, according to the World Gold Council’s Gold Demand Trends Report.

In value terms Gold Demand was 14.0% lower year on year at $57.6bn and the average gold price of $1,652/oz was down 3% on the record average Q3 2011 price.

The key findings from the report are as follows:

  • Global investment in ETFs over the quarter was up significantly by 56% on the previous year.
  • The Indian market is showing signs of recovery, up 9% to 223.1t from 204.8t in Q3 2011 following increases in both jewelry and investment demand. In comparison with Q3 2011 jewelry demand was up 7% to 136.1t and investment demand rose by 12% to 87.0t. Investors moved into the imitation coin market, up 59%, whilst jewelry increased due to re-stocking ahead of the Indian wedding and festival season. Indians appear to have acclimatized to recent price trends and have been buying into a rising market.
  • In China Gold Demand fell 8% to 176.8t in Q3 2012 from 191.2t in Q3 2011 due to falls in jewelry of 6% and investment of 12% mainly, as a result of negative sentiment surrounding China’s slowing economy. Jewelry demand was 123.8t in Q3 2012, due to a decline in purchases of 18k pieces and a notable slowdown in the expansion of the retail network, as stock-building reduced. Investment demand was down to 53.0t Demand this quarter remains 19% above the longer term average.
  • Central banks bought 97.6t in the quarter. In six out of the last seven quarters, central bank Gold Demand has been around 100t, which is a sharp increase from as recently as 2010. The year to date figure for central bank buying is up 9%.

Marcus Grubb, Managing Director, Investment at the World Gold Council said: “Gold is beginning to re-establish itself as part of the fabric of the financial system. In the medium term, the quantitative easing initiatives in the West and the continuing growth story in the East, particularly in India and China, coupled with the seasonally strong quarter coming up in Asia, are excellent indicators for further growth in the Gold Market.

“Against a backdrop of continued global economic uncertainty and elections in China and the US, it is clear from five year rising demand trends that gold’s fundamental property as a vehicle for capital preservation continues to endure, as evidenced by this quarter’s increase in global ETF investment, up 56% and continued purchasing by central banks, the ultimate long term investors.”

Gold Demand and supply statistics for Q3 2012:

  • Third quarter Gold Demand of 1,084.6t was down 11.0% in comparison to Q3 2011.
  • The value measure of Gold Demand was 14.0% lower year on year at $57.6bn.
  • The average gold price of $1,652/oz was down 3% on the record average Q3 2011 price.
  • Investment demand (the sum of ETFs and total bar and coin demand) was 429.9t, down 16% compared to the same quarter last year, but was 23% above the five year average.
  • Demand for Gold ETF and similar products in Q3 were up by 56.0% on the previous year to 136.0T.
  • Demand in the jewelry sector was down 2.0% to 448.8T compared to 458.0T in the same quarter in 2011. The ongoing slowdown in China continued to dampen demand in the second largest regional jewelry market
  • Third quarter Gold Demand in the technology sector was down on Q3 2011 by 6.0% at 108.0T though remains stable. Use of gold in electronics has shown a steady level of incremental growth since Q4 2011, driven by demand for tablet devices and mobile phones among others.
  • Both the supply of gold and recycling were down 2% in the third quarter compared to year earlier levels, with mine production down 1% for Q3 2012.

China Un-veils New Top Leaders:

China on Thursday unveiled the elite group of leaders who will set the agenda for the country for the next decade, presenting them to journalists from around the globe after months of secretive bargaining and abundant speculation. The seven members of the committee that sits atop China’s political system strode out onto a stage in the Great Hall of the People in Beijing, reported CNN. They were led by Xi Jinping, who takes over from Hu Jintao as head of the Communist Party, which has ruled China for more than 60 years. Xi is joined on the new Politburo Standing Committee, the party’s top decision-making body, by Li Keqiang, who is expected to replace Wen Jiabao as premier early next year. Xi also succeeded Hu as head of China’s powerful Central Military Commission, which oversees major national security and military affairs. That makes for a cleaner transition than in the past two power handovers, when the former party chiefs held onto the key military role for years afterward, using it to keep exercising considerable power and influence. Xi’s immediate assumption of the military leadership, unlike his two predecessors, and the decision to cut the Standing Committee to seven from nine leave fewer voices to obstruct consensus and may help him consolidate control. Those moves may also speed up decisions on challenges ranging from an economic revamp and shrinking the nation’s wealth gap to a strengthened campaign against corruption and managing territorial disputes with Japan.

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