Gold demand dips despite central banks' purchases in first three months

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GOLD MARKET
Gold demand dips despite central banks' purchases in first three months
The Nation

BANGKOK: -- The Bank of Thailand's ranking in the top 40 gold-holding central banks and institutions slipped one place to 26th in the first quarter as some central banks built up their gold reserves in light of falling prices, according to the latest data by the World Gold Council (WGC).

The BOT's gold reserves stayed unchanged at 152.4 tonnes or 4 per cent of reserves.

According to the leading industry publication on trends in gold demand, central banks have been net purchasers of gold for 17 consecutive quarters, with net purchase of 119.4 tonnes in the first quarter of this year.

"Stability and continuity are synonymous with central banks, and these proved to be the defining themes in the first quarter," the WGC said in its quarterly "Gold Demand Trends" report released yesterday.

"Central banks and other official institutions continued their buying momentum. The primary driver of this accumulation of gold reserves continues to be diversification. Many central banks remain exposed to a small number of key reserve currencies and look to gold as a hedge against volatile currency movements," the report said.

Russia's central bank bought more than 30 tonnes in the first quarter, bringing its total gold reserves to almost 1,240 tonnes. Also reporting net purchases in the quarter were Kazakhstan (6.6 tonnes), Belarus (2.1 tonnes), Malaysia (1.2 tonnes) and Mauritius (1 tonne). In the first quarter, gold prices eased by 6 per cent from the same period last year, to average US$1,218.50 an ounce.

Because of the falling price, Thai consumers' investment demand dipped the most among countries in Southeast Asia. Gold investment, involving exchange-traded funds and gold bars and coins, fell 20 per cent to 19.5 tonnes in Thailand in the quarter. The WGC attributed the sharp drop to continued political turmoil and currency trends. "The Thai baht has been relatively strong at a time when many other Asian currencies have been depreciating against the US dollar. The impact was to exaggerate the February decline in the gold price, discouraging investment," it said.

Globally, the value of gold demand dropped by 7 per cent to $42.3 billion in the first quarter of this year, well below the five-year average of $51.55 billion, according to the WGC.

Demand from the jewellery sector showed a decline by 9 per cent. Investment demand also dropped by 2 per cent, particularly due to the lower demand for gold bars and coins.

In terms of volume, global gold demand dipped by 11 tonnes or 1 per cent to 1,079.3 tonnes in the first quarter. Demand from the jewellery sector dropped 3 per cent year on year. Investment demand expanded by 4 per cent on year.

Source: http://www.nationmultimedia.com/business/Gold-demand-dips-despite-central-banks-purchases-i-30260113.html


-- The Nation 2015-05-15