JOHANNESBURG (miningweekly.com) – Gold demand measured on a value basis increased to an all-time record of $236.4-billion in 2012, with official-sector central bank buying rising to its highest level in nearly half a century.
While on a tonnage basis, the total for the year was down 4% to 4 405.5 t, the fourth quarter (Q4) of 2012 saw a 4% tonnage increase as well as a 6% dollar increase.
“Jewellery, up 11%, was the main driver to 525 t,” World Gold Council (WGC) MD Marcus Grubb told Mining Weekly Online from London on Thursday, following the release of the WGC’s Q4 and full year 2012 'Gold Demand Trends' report.
Grubb said the standout was the recovery of Indian demand in Q4, which saw demand rise 41% to 262 t, made up of both jewellery and investment.
“This was a pretty thumping performance for what is still the largest market in the world, by a short hair, against China,” Grubb added.
The other standout was central bank buying, which, for the full-year buying rose 17% to 535 t, the highest level in 48 years.
While the full year did not present as full a picture as Q4, it was still a “very strong year” for gold.
It was the second-highest tonnage year on record, even though overall tonnage fell 4% to 4 405 t, but 4 500 t with over-the-counter investment added.
Growth in jewellery and central bank demand together outdid declines in the investment and technology sectors in the Q4 to generate gold demand of 1 195.9 t worth $66.2-billion.
Grubb said that India and China remained the world’s gold powerhouses, with yearly demand in those two largest gold markets rising 30% above the average for the past decade.
Despite measures aimed at curbing demand, gold continued to have an important role to play in India’s underdeveloped financial system, said Grubb, who noted that central bank buying had risen to its highest level since 1964.
On the supply side, the WGC’s said that gold recycling was down 5% and Q4 gold supply from mines was up 2%.
Global Q4 tonnage was up 4% to 1 195.9 t, and the average Q4 gold price reached $1 721.80/oz, up 1% on the previous record.
The full-year average price in 2012 was 6% higher at $1 669/oz.
India’s jewellery and investment demand – the sum of exchange traded fund (ETF), bar and coin buying – reached the highest levels in six quarters, when year-on-year jewellery demand rose 35% to 153 t and investment purchases totalled 108.9 t.
In China, Q4 demand was up 1% to 202.5 t, with jewellery demand 1% up at 137 t, and investment demand 2% up at 65.5 t.
Official-sector Q4 purchases were up 29% to 145 t in the eighth consecutive quarter of net central bank buying and global ETF investment rose 51% year-on-year.
Fourth quarter demand for gold in the technology sector was down 3% at 100.9 t following moves by manufacturers to substitute gold bonding wire.
Jewellery demand in volume terms was expected to soften as 2013 unfolded, while sustaining healthy values.
Investment demand, while to some extent dependent on the movement in the gold price during the year and exchange-rate effects on local prices, should again exceed historical averages as investors continued to focus on gold’s role as a store of wealth.
Continued innovation in the range of gold investment products available across a range of countries – for example, gold accumulation plans in India and China – confirmed the appetite for gold among investors.
New 2012 central bank gold buyers included Brazil and Paraguay, both making significant purchases during the year.
The list of countries adding to their official gold holdings remained heavily concentrated in developing markets, which partly reflected the scale of growth in the reserves of these markets over recent years.
Among the countries to record an increase in yearly production were China and Russia, while South Africa and Indonesia saw the largest absolute declines.
Recycling of gold contributed 1 625.6 t to total supply, 2.6% or 42.9 t less than in 2011, despite a 6% increase in the average gold price over the period, which intuitively would seem likely to draw out additional supply from this source, WGC's trend report noted.