Global demand for gold declined by 12% in Q2 2015, touching a new six year low at 914.9 tonnes (t) as a result of a drop across virtually all sectors and regions, the World Gold Council (WGC) said today while releasing its quarterly publication, Gold Demand Trends.  The drop was primarily on account of weaker consumer demand in India and China, WGC said, adding that “these markets accounted for almost half the fall in global demand” over the three month period.

On a half-yearly basis, however, the year-on-year decline in global gold demand was a more modest 6%, the report said.

Describing the three months ending June 30, 2015 as a “difficult quarter”, WGC however noted that the industry could look forward to a brighter second half, particularly since consumers have responded positively to the recent fall in the price of the yellow metal.

The jewellery sector was one of the biggest losers in volume terms, with demand dropping by 81.1 t year-on-year, largely on account of “market-specific issues” in India and China.

In India, H1 jewellery demand was just 3% below the 2014 levels, but there was a 23% year-on-year fall in Q2 jewellery demand. This can largely be traced, the report said, to the unseasonal rainfall that damaged crops in Q1 and the consequent impact on incomes among the all-important rural population.

The urban demand scenario was relatively better though it was mainly the high-end, branded chain stores in larger cities that saw modest year-on-year growth, while many small, independent jewellers in Tier 2 cities and below suffered sizable losses. 

As the Hindu calendar this year has no auspicious days for marriages between 11 June and 1 November, Indian wedding-related demand was weaker in the second quarter as wedding purchases are usually made 2-3 months in advance of the event.

In China, continued economic slowdown and severe fluctuations in the domestic stock market knocked consumer sentiment. According to the report, “The consumer environment in China has been overshadowed by the deceleration in domestic GDP growth and the jewellery market has been a notable casualty of this trend; the decline in network expansion into Tier 3 and 4 cities by jewellery retail chains bears witness to this.”

WGC says that in China, demand for 24 karat ‘pure’ gold was worst affected, while 18 karat jewellery was more resilient.

The report also highlights that jewellery demand in the UAE slid 22%, with losses attributed to lower spending by European tourists (on the back of the weaker euro) and regional geo-political tensions; while US jewellery demand remained on a “gentle upward course”, posting another small (2%) year-on-year increase. The rolling four-quarter total of US jewellery demand reached 117.6t – its highest level since Q3 2011 – as the market extended its recent cautious uptrend.