Gold demand jumps 13% in Q3

In addition, gold investment demand (bar and coin demand) surged 27% in the third quarter.

Improving jewellery market and the forthcoming holiday season are two factors that should boost gold demand between now and 2016, Hewitt said.

“If you look at the consumer/long-term investor base, the dip in the price that gold experienced early in the quarter actually supported the market”, said Juan Carlos Artigas, director of investment research for the World Gold Council.

Bullion for immediate delivery edged up 0.1 per cent to US$1,087.40 an ounce in Singapore yesterday, according to Bloomberg, just above the $1,077.40 an ounce level on July 24, the lowest since 2010.

Hewitt said the United States “saw the most dramatic growth” in demand for gold bars and coins in the reporting period. Uncertainty in eastern Europe due to factors, including continuing tensions between Russian Federation and Ukraine, saw demand climb by 35 per cent to 61 tonnes. That being said, central bank demand remains down 3% year to date for 2015 versus a year ago.

Elsewhere recycling levels were down 6% year-on-year to 252 tonnes compared to 268 tonnes in Q3 last year, while demand in the technology sector declined 4% to 84t as the sector continued to endure pressure, with the industry choosing to shift towards alternative, cheaper materials in technological applications.

Meanwhile, global jewelry demand in the July-September period rose 6% to 631.9 tonnes.

Gold prices at five-and-a-half-year lows in July and August, combined with fears of a rise in U.S. interest rates by the Federal Reserve, currency concerns in China and persistent concerns over the future of Greece within the Eurozone prompted buying.

The total jewellery demand during the quarter was up 15% to 211.1 tonnes, while in value terms the increase was 7.7%, to Rs 49,558 crore.

Central banks were also buying, with purchases reaching 175 tons, near the record high level for the same period previous year.

The World Gold Council said that net purchases from central banks have continued, with a note that the central bank picture has become more transparent. Buying would depend on the price of the yellow metal, Jose said.

Global supply edged up 1% year-on-year to 1,100.1 tonnes, the WGC said.

Barring a 25-tonne rise in the first 3 months of 2015, gold ETF products have now sold metal – returned to market as shareholders liquidated stock and so cut the size of holdings needed to back the value of the trust funds – every quarter since the start of 2013, shedding 1,120 tonnes in total. Output has been curtailed as prices fell toward the cost of production, although miners have been trying to reduce expenses and have been helped by lower energy costs. Older mines in South Africa and the US are seeing falling output while many large new mines are near their production peaks.

Total supply was marginally higher year-on-year up 1% at 1,100t.