Bullion investors buoyed gold demand in 2015

The following is an edited summary from the World Gold Council based on its Gold Demand Trends report. For the full report, please visit www.gold.org.

Global gold demand in 2015 was virtually flat compared to 2014 at 4,212 tonnes, according to the World Gold Council’s latest Gold Demand Trends report. Despite a challenging start to the year, gold demand rebounded in the second half of 2015, as a result of sustained buying from central banks and a strong second half from China and India. 

This was particularly evident in the retail investment sector, where bar and coin purchases were led by China and Europe, with support from the U.S., as investors took advantage of weaker prices amid a softening economic backdrop, financial turbulence and ongoing geopolitical tension. 

Global investment demand for 2015 grew 8% to 878 tonnes, from 815 tonnes in 2014. Bar and coin demand remained steady in 2015, as investors took advantage of a weaker price in the third quarter (Q3). The exchange-traded funds market saw slower outflows, with 133 tonnes in 2015, compared to 185 tonnes in 2014. Fourth-quarter (Q4) 2015 witnessed more of these trends, with a number of key regions seeing double digit growth. 

Overall jewellery demand for  2015 was down 3% to 2,415 tonnes, from 2,481 tonnes in the previous year. After a slower start to the year, the third and fourth quarters combined produced the strongest second half-year total for gold jewellery in 11 years. Fourth-quarter 2015 saw steady levels of jewellery demand at 671 tonnes compared to 677 tonnes in the same period last year, with retailers reporting higher sales around the Indian festival period. 

Central Bank demand for 2015 saw a small uptick from 584 tonnes in 2014 to 588 tonnes in 2015, as diversification was reinforced by a tumbling oil price and reduced confidence in the global economy. Demand in Q4 stayed strong — up 25% to 167 tonnes, from 134 tonnes in Q4 2014 — making this the 20th straight quarter of net purchasing. 

Gold demand in Q4 showed positive signs, after a strong Q3. In India both the investment (60 tonnes) and jewellery (173 tonnes) sectors were up 6%, boosted by the festival season. In China — which has witnessed economic turmoil, consumer uncertainty and currency weakness — gold demand held up well, particularly in the investment sector, up 25% to 48 tonnes for the quarter.

In 2015, China (985 tonnes) and India (849 tonnes) remained dominant in the global gold market, accounting for close to 45% of total global gold demand during 2015, with annual consumer demand in both up 2% and 1%. 

Total supply for the year experienced a 4% drop to 4,258 tonnes for 2015, compared to 4,414 tonnes in 2014. This reflects recycling hitting multi-year lows and mine production falling to its lowest level since 2008. Mine production contracted in Q4 — the first quarterly contraction since 2008 — as cost-cutting took effect. Fourth-quarter 2015 reported a 10% decline to 1,037 tonnes, compared to 1,152 tonnes in the same period last year, as primary production slowed owing to weaker gold prices, mine closures and project delays.