In its Gold Demand Trends report, the World Gold Council (WGC) stated that gold jewellery demand reached “close to pre-crisis levels” in 2013 as consumers reacted to a fall in prices.
The study reviewed the overall gold market for 2013 and was broken down into five categories: jewellery, investment, central banks, technology and supply.
Describing the period as “the year of the consumer”, the report showed a 21 per cent rise in gold demand for this buying group. In value terms however, it noted that outflows from exchange-traded funds resulted in a 15 per cent decline in overall demand from 2012 to a total of 3,756.1 tonnes, valued at US$170 billion (AU$189.6 b).
The WGC reported that much of the increased demand was concentrated in the first half of the year, attributing this to the sharp decline in the gold price in April and June. The average annual gold price was about 16 per cent lower than 2012.
Price-sensitive markets like China – the world’s largest gold market – and India were said to respond quickly to the fall in price. The trend extended to western markets in the second half of the year, particularly in the jewellery sector.
Recovery in jewellery demand
In volume terms, gold jewellery increased by 17 per cent year-on-year to 2,209.5 tonnes. The report stated that although the dollar value of annual jewellery demand decreased, it was only by two per cent – a figure that “clearly illustrates the strength of the consumer demand in volume terms”.
As was the case in the overall gold market, the jewellery sector also achieved the bulk of increased demand in the first half of the year.
New record values were set in India (Rp1,620 billion, approximately AU$29 b), China (RMB187 billion, approximately AU$34 b) and Turkey (TL6.3 billion, approximately AU$3.1 b), while Japan recorded its highest value since 2008 (¥77.6 billion, approximately AU$847.4 million).
During the second half of the year, the global volume of jewellery demand increased by seven per cent to 66.8 tonnes, with the US and the United Kingdom generating a combined 14 tonnes of this growth.
Jewellery demand in Russia experienced its fourth annual increase and a five-year high, fuelled by continued expansion of the middle class.
Unlike most eastern markets where the bulk of demand occurred in the first half of the year, increased results in Japan were concentrated in the second half. This was reportedly partly due to a more encouraging economic environment, and partly a function of the upcoming increase in domestic sales tax from five to eight per cent, which takes effect from April 2014.
There was also a notable shift in 2013 towards a consumer preference for higher carat jewellery. The report noted a “quasi-investment” element to jewellery purchases, highlighting that an upsurge in second and third quarter demand led to a shortage of retail investment products.
While the report provided a summary of global gold demand, there was no mention of Australian-specific trends.