The latest World Gold Council Gold Demand Trends report, covering the period of January to March 2013 has indicated that appetite for owning gold jewellery and a market driven by diverse global demand continues to grow. Total jewellery demand was up 12% year-on-year in Q1 2013, primarily driven by Asian markets. Jewellery demand in China was up 19% and stood at a record 185 t, with demand in India and the Middle East was up 15% and in US demand increased 6%, for the first time since 2005.

Demand for gold in China and India was also driven by an increase in bar and coin sales – up 22% year-on-year in China and 52% in India. In the US demand for bars and coins was up 43% compared with the same quarter in 2012. Globally bar investment was up 8% and official coins such as American Eagles and Canadian Maple Leafs were up 18%. Gold held by gold-backed ETFs, which in 2012 accounted for 6% of the world’s gold demand fell by 177 t. Central Banks remained significant acquirers of gold, making purchases in excess of 100t  for the seventh consecutive quarter. Overall total global demand for gold in Q1 2013 was 963t, down 19% from Q4 2012.

Marcus Grubb, Managing Director, Investment at the World Gold Council said “The price drop in April, fuelled by non-physical moves in the market, proved to be the catalyst for a surge of buying that has left many retailers short of stock and refineries introducing waiting lists for deliveries. Putting this into context, sales of bars and coins, jewellery and consumption in the technology sector still make up 81% of the market. What these figures show is that even before the events of April, the fundamentals of the gold market remain robust with; growing demand in India and China, central banks consistently adding gold to their reserves and strong buying of investment products such as gold bars and coins.”

In value terms, gold demand in Q1 2013 was $51bn, down 23% compared to Q4 2012. The average gold price of $1,632/oz was down 5% on the average Q4 2012 price, and down 3% on the same period the previous year.

Grubb continued“ Gold-backed ETFs, which made up 6% of gold demand in 2012, have seen some holders, primarily in the US, collect profits and move into equities. While gold ETF holdings are down, this has been balanced by 378t of investment in bars and coins, an increase of 10% on the same period last year, and up 12% on Q4 2012. Overall, the long-term appetite for investment remains strong, demonstrated by the continued demand for bars and coins.”

Gold demand and supply statistics for Q1 2013

• First quarter gold demand of 963 t was down 13% compared with Q1 2012
• The value measure of gold demand in Q1 2013 was $51bn, down 16% on the year before
• The Q1 2013 average gold price was $1,632 down 3% on the year before
• The net outflow from ETFs was 177 t in the quarter. That fall pushed the sum of ETF and total bar and coin demand to just below 201 t. Total investment demand was 320 t in Q1 2013, flat compared with a year ago
• Demand in the jewellery sector was up 12% to 551 t.  Jewellery demand in China was 185 t while demand in India was 160 t
• Demand in the technology sector once again surpassed 100 t for the quarter  Demand in Q1 2013 was 102 t, down 4% on the previous year
• The Q1 2013 total mine production was up 4% on last year at 688 t. Recycling fell 4% resulting in a total supply that is 1% higher than a year ago
• Net central bank purchases totalled 109 t, 5% lower than a year ago, making this the ninth consecutive quarter in which central banks have been net purchasers of gold