Consumer demand for gold in the first quarter was 749.5 tonnes, or 10%, lower than a year earlier, according to a survey conducted by the London-based World Gold Council.
The quarter’s most striking feature was a surge in retail investment spending in Japan. The reduction in government bank deposit guarantees in that country, coupled with concerns over financial and economic instability, caused many Japanese to convert their savings into gold. As a result, gold retail investment purchases rose 47.5 tonnes, nearly four times year-earlier levels.
Retail investment demand was also strong in Turkey, where it rose 153% between the first quarters of 2001 and 2002.
Consumer investment in many countries was countered by profit-taking spurred by the price rise.
In contrast, conditions were unfavourable for jewelry demand: world economic growth was weak, political uncertainties undermined confidence.
Demand in India in the first quarter was 40% lower than a year earlier, though the extent of the fall was partly due to the exceptional strength of demand in the first quarter. Indian demand is always sensitive to price volatility and sharp price rises, particularly when these are coupled with slow consumer spending.
Demand was strong in countries where economic circumstances were more propitious. Consumption in Pakistan rose 38%; in China, 5%; in South Korea, 7%; in Vietnam, 11%; and in the U.K., 3%. Meanwhile, demand increased 2% in the U.S., the world’s second-largest market for the yellow metal.
On the downside, demand slipped 9% in the Middle East and plummeted 25% in Thailand.
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