Gold Price, Demand and Trends

Global gold demand in Q3 2012 was 1,084.6 tonnes (t), down 11% from the record Q3 2011 figure of 1,223.5t. This dip in demand is in comparison with exceptional demand in Q3 last year. Gold demand remains resilient. Q3 2012 was above the five-year quarterly average of 984.7t.

Economist and Hedge Fund Manager Shayne Heffernan of www.livetradingnews.com takes a look at Gold:

Gold slid more than 1 percent to a one-week low on Thursday at $1,704.69 an ounce, under pressure from a fresh fall in equity markets, with momentum picking up as the metal gained support near $1,715.

Given the massive money printing to be conducted by the Western Governments, Gold is set for a long-term rally: $2,500 in 2013, and $5,000 is possible by 2015. Europe, the U.S. and Japan are all printing far too much money, and there will be consequences for the excessive nature of their policies.

 RATIOS Gold/Silver52.778915-Nov-2012 22:22 Gold/Platinum1.092415-Nov-2012 22:22 Gold/Palladium2.689715-Nov-2012 22:22

In value terms, gold demand was 14% lower year on year at $57.6bn, and the average gold price of $1,652/oz was down 3% on the record average Q3 2011 price.

The key findings from the report are as follows:

Global investment in ETFs over the quarter were up significantly by 56% on the previous year.

The Indian market is showing signs of recovery, up 9% to 223.1t from 204.8t in Q3 2011 following increases in both jewelry and investment demand. In comparison with Q3 2011, jewelry demand was up 7% to 136.1t, and investment demand rose by 12% to 87.0t. Investors moved into the imitation coin market*, up 59%, while jewellery increased due to re-stocking ahead of the Indian wedding and festival season. Indians appear to have acclimatized to recent price trends and have been buying into a rising market.

In China, demand fell 8% to 176.8t in Q3 2012, from 191.2t in Q3 2011, due to falls in jewelry of 6% and investment of 12%, which mainly resulted from negative sentiment surrounding China’s slowing economy. Jewelry demand was 123.8t in Q3 2012, due to a decline in purchases of 18k pieces and a notable slowdown in the expansion of the retail network, as stock-building reduced. Investment demand was down to 53.0t. Demand this quarter remains 19% above the long-term average.

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Central banks bought 97.6t in the quarter. In six out of the last seven quarters, central bank demand has been around 100t, which is a sharp increase from as recently as 2010. The year to date figure for central bank buying is up 9%.

ETF HOLDINGS – GOLD View real-timeName 14NovChange (OZ)% Change   SPDR GOLD TRUST42,963,415-77,512-0.18   ETFS GOLD EXL US10,292,503+37,242+0.36   ZKB PHYSCL GOLD7,453,569+2,057+0.03   COMEX GOLD TRUST6,816,433––   JULIUS BR PY GLD3,561,960––   NEWGOLD ETF1,364,720––   SPROTT PHY GOLD1,616,832––   ETFS PY SWIS GLD1,116,063––   ETF GOLD TOTAL *75,185,496-38,211-0.05   

* Totals may not sum due to rounding.

Shayne HeffernanShayne Heffernan oversees the management of funds for institutions and high net worth individuals.Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands-on experience in venture capital, where he has been involved in several start-ups that have seen market capitalization over $500m and one that reached a peak market cap of $15b. He has managed and overseen start-ups in the mining, shipping, technology and financial services sectors. Read the Terms of Service.

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