This section of the report considers the main themes to have emerged in global gold demand during the second quarter of 2014.
- Jewellery: Second quarter demand, which held within the broad upward trend from 2009, accounted for over 50% of global gold demand in the second quarter. Year-on-year comparisons were affected by the surge in demand seen in Q2 of the previous year, but demand was largely in line with its five-year average.
- Investment: The gold price followed a narrow sideways range in the second quarter, making a subdued environment for gold investors. Consequently, bar and coin demand saw a significant reduction from the record high in Q2 2013 and outflows from ETFs slowed sharply.
- Technology: Demand for gold in technological applications fell modestly to 101t. Improvements in both the economic environment and consumer sentiment helped stem losses from substitution. However, fabricators in all segments continue to look for cheaper alternatives to gold in order to manage costs.
- Central Banks: This sector remains a solid element of demand with net purchases of 118t in the second quarter, representing a 28% increase year-on-year. The announcement of a fourth CBGA in the second quarter also reiterated that sales will not be forthcoming from some of the largest holders.
- Supply: Gold supply increased 10%, owing to a 13% increase in mine supply in the second quarter; recycled gold was little changed. Q2 also saw 50t of net producer hedging; however these fresh positions have had minimal effect on the overall outstanding hedge book.
Gold demand of 964t in the second quarter was, unsurprisingly, lower when compared with the exceptional upsurge in demand in Q2 2013. Jewellery demand weakened year-on-year, but the broad, 5-year uptrend remains intact. Investment demand pulled back from the extremes seen during last year as relatively stable price conditions contributed to the subdued environment. Central banks continued to buy gold at a solid, steady pace. Mine production grew 4% year-on-year for a second consecutive quarter, contributing to a 10% increase in gold supply.