Central banks continue to accumulate gold

Central banks across the globe continued to accumulate gold, albeit at a slower rate than the elevated levels seen in 2012, according to a global report.

"Year-to-date, global central bank gold reserves have increased by almost 300 tonnes," said the latest World Gold Council Gold Demand Trends report, which covers the period July-September 2013. " Net central bank purchases totaled 93 tonnes, some 17 per cent down on the third quarter of 2012."

However, the the supply of gold fell by three per cent from the same period in 2012, the report said, adding that a sharp contraction in the supply of gold from recycling accounted for the decline as mine production increased by four per cent.

Likewise, the jewellery sector delivered another quarter of solid year-on-year growth as consumers across the globe, encouraged by lower average prices, showed an increasing demand for higher carat pieces.
The report also revealed that overall demand for gold in the third quarter of 2013 stood at 869 tonnes, down by 21 per cent on the same period a year ago. However, demand remained strong across most countries and sectors. "Total consumer demand in China alone was 210 tonnes in the third quarter if 2013, a rise of 18 per cent compared to the same period last year," it added.

"The third quarter of 2013 was another period of robust demand for gold in the Technology sector," it said, adding that demand related to the use of gold in electronics has shown the most resilience, aided by demand for tablets and smart phones.

The restrictions introduced by the Indian government on importing gold through official channels had the intended effect of substantially supressing demand, with total gold consumption in India standing at 148t in the third quarter, compared to 310 tonnes in the second quarter of this year.
However, the strength of Indian demand in the first half of the year means that full year consumer demand is still on track to narrowly exceed the 2012 total. One side effect of this was that while global recycling of gold fell by 11 per cent compared to the same quarter in 2012, in India the recycling figure increased more than fivefold to 61 tonnes, the report stated.

Likewise, the average gold price for the quarter was $1,326/oz, down by 20 per cent on the same quarter last year. "In value terms, gold demand in the third quarter of 2013 was $37 billion, down by 37 per cent compared to the third quarter of 2012.