TGIETFs - What Would Gold Do Without Them?

• Print
• E-Mail

The impact on overall identifiable investment was therefore broadly neutral in tonnage terms, although the dollar value rose 41% to $4.3bn. Meanwhile inferred investment demand (which cannot be directly measured and is proxied by the statistical residual) posted its second consecutive strong quarter reaching 138.6 tonnes.

This brought estimated total investment to 284.3 tonnes or $8.5bn, more than doubling and tripling, respectively, year-earlier levels.

Industrial and dental demand declined by 5% to 110.3 tonnes, primarily in response to the slowing US economy. In value terms, this was equivalent to $3.3bn, a rise of 35%.

Gold supply was less constrained than a year ago, rising 6% in tonnage terms. This was primarily due to higher scrap levels (up 30%) as a result of the rising price.

The market most severely affected by the movement in the gold price was India, where consumer demand fell 50% to 102.1 tonnes. Jewellery and investment demand, at 71.1 tonnes and 31.0 tonnes respectively, were half the levels of Q1 2007 as the high and volatile gold price deterred purchasing.

In marked contrast to this, demand in China grew by 15% to 101.7 tonnes. Both elements of Chinese demand increased during the first quarter as continued economic strength allowed consumers to increase their purchases regardless of the rising price. Jewellery demand rose 9% to 86.6 tonnes and investment demand surged 63% to 15.1 tonnes.

In Japan, sales of existing gold holdings by investors seeking a profit outweighed purchases

to the tune of 37.0 tonnes. Jewellery consumption also declined, falling 4% to 7.4 tonnes. It was a similar story in Indonesia, where net sales of investment products reached 2.2 tonnes and jewellery demand slipped 27% to 11.3 tonnes.

In Vietnam, meanwhile, investment demand more than doubled to 31.5 tonnes, making it the largest investment market during the first quarter. Jewellery demand fell in reaction to the higher price, however, down 19% to 5.3 tonnes.

Demand declined in all countries across the Middle East, with the notable exception of Egypt, where it increased 15% to 18.0 tonnes.