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WGC: Gold jewellery demand tumbled to 7-year low in 2016

iconFeb 8, 2017 09:34
The Indian gold jewellery demand recorded the biggest ever yearly decline in 2016.

By Paul Ploumis

SEATTLE (Scrap Monster): The Gold Demand Trends Report for the full year 2016 released by the World Gold Council (WGC) suggests significant decline in gold jewellery demand during the year. The demand hit a seven-year low at 2,041.6t in 2016, mainly on account of jump in gold prices. The full year demand declined by 15% over the previous year. India and China accounted for almost 80% of the decline in 2016. India, faced by challenges on several fronts, registered the biggest decline in gold jewellery demand during the year.

The Indian gold jewellery demand recorded the biggest ever yearly decline in 2016. The demand totaled 514t, significantly lower by 148.3t when compared with the previous year. The Q1 sales were affected by nationwide jewellers’ strike. The demand remained subdued during the initial three quarters of the year. The sharp decline in prices coupled with the festive buying activity during Dussehra lifted the gold demand during the initial two weeks of October. The demand spiked following government’s announcement to withdraw currency notes of higher denominations. However, this was short-lived as shortage of liquid cash impacted purchases. The cash crunch situation sent rural gold buying activity to fresh lows.

China reported 17% year-on-year decline in gold jewellery demand during the previous year. The demand plunged by 13% during Q4 alone. The gold jewellery demand failed to pick up during the ‘Golden Week’ national holiday season in October, in spite of a sharp drop in gold prices. Although sentiment improved in December, the sales were constrained by tight supply. The demand recovered further towards the end of the year. The rise in demand resulted in higher gold imports. However, this was inadequate to meet the demand, WGC report notes.

The annual jewellery demand in other Asian countries too dropped during entire year 2016, despite a late Q4 recovery on account of gold price dip. The demand by Vietnam dropped marginally from 15.6t in 2015 to 15.4t in 2016. This is the first decline in demand by the country, after posting steady growth since 2012. On the other hand, the Japanese jewellery demand grew by 2%. The jump in Japanese domestic consumption was partially offset by drop in tourist demand, WGC noted.

The Turkish annual jewellery demand touched a low of 40t, mainly on the back of high domestic gold prices and weak consumer sentiment. The demand during Q4 alone witnessed a decline of 15% year-on-year. The Middle East demand plunged 16% to hit a new low of 193.1t in 2016, hit by low oil prices. The UAE gold demand totaled 43t, falling to 19-year low. The currency crisis in Egypt pushed the country’s demand by one-third to a new low of 25.5t. However, Iran reported growth in annual demand in 2016.

The US demand dropped slightly by 1% to 118.3t. The full year demand by the European region remained mostly stable with notable declines in the UK and France. The annual jewellery demand in the UK dropped by 3% to total 25.2t in 2016. Similarly, France reported 4% yearly decline in demand.

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