The World Gold Council (WGC) reported that gold demand fell 11% in tonnage terms 2009 from the exceptional levels of 2008, yet still remained above US$100 billion in dollar terms for the second year in a row. The decline in tonnage masked a progressive recovery in jewellery and industrial demand and resilient investment demand amid uncertainty in global financial and commodity markets.
The identifiable demand in tonnage declined 11% to 233.85.8 tonnes for the full year, while demand in the final quarter dropped 24%, though it marked a 5% year-on-year increase in US$ value terms as the gold price averaged US$1,099/oz, up 38% from Q4 2008.
The jewellery sector's demand for gold soared 49% during 2009 compared to the first quarter due to a rebound in the Indian market, enabling it to maintain its position as the world’s largest gold consumer. Another Asian country, China, was the only gold jewellery market to grow, with the demand climbing 6% for the full year.
WGC said that while total jewellery demand was 8% lower in the final quarter of 2009, it showed clear signs of rebound compared to earlier quarters of the year as the demand rose to 500.4 t (tonnes) from 336.3 t in the first three months of the year, signalling higher consumer confidence amid higher gold prices.
Identifiable gold investment in 2009 was 7% higher than in 2008, yet down 50% when compared to the peak levels of the final quarter of 2008, and double the levels of the previous year with the inferred demand included.
As economic conditions improved, industrial demand also increased, benefiting from a rebound in electronics demand, which helped it to an 11% year-on-year increase in Q4 2009.
“2009 was a year which provided a clear illustration of the diversity inherent in the global gold market. As the year progressed a rebalancing of gold market fundamentals occurred, ensuring that as investment demand came off from the exceptional levels seen in the first quarter, total demand for the year remained robust thanks to a rebound in jewellery and industrial demand,” said the chief executive of the World Gold Council, Aram Shishmanian.
Supply also increased, improving 11% during the year compared to 2008, supporting the gold price at the high levels. WGC reported that producer de-hedging increased in the second half of the year, negatively impacting supply.
WGC projects gold to retain its appeal regardless of the prevailing market conditions due to the balance provided by its broad supply and demand drivers. http://www.proactiveinvestors.co.uk/companies/news/13637/world-gold-council-says-gold-demand-remained-above-us100-bln-in-2009-13637.html
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