Global gold demand experiences 18% dive: WGC

Global demand for gold has dropped 18 percent in the first quarter of 2017 compared to the same period last year, the World Gold Council (WGC) reported recently. The descent is attributed mainly to less inflows into exchange-traded funds (ETFs) and slower demand from central banks.

According to WGC's statistics, overall gold demand from January to March was at 1,034.5 metric tons, down from last year's 1,262.8 metric tons.

In the first three months of 2017, inflows in ETFs were at 109.1 metric tons, a 68 percent year-on-year drop, while central bank demand was at 76.3 metric tons, falling by nearly 28 metric tons or 27 percent from 2016 figures.

The organization noted, however, that the 2017 numbers were misrepresented by the "exceptionally high first quarter last year", and there was healthy demand in the first three months of this year despite the figures being lower.

"A key reason why demand doesn’t look as strong in Q1 2017 is because demand in Q1 2016 was exceptionally high, especially on the investment side. Just to put things into context, ETF flows were the second largest on record. Anything you compare to such a high figure is going to look small,” said Juan Carlos Artigas, director of investment research at the WGC.

"But when you look at it in context, Q1 2017 was a robust quarter, just not as remarkable as the first quarter of 2016. There was good demand coming from the investment market in Q1 of this year, from both bars and coins as well as ETFs. In particular, European ETFs had strong flows," he explained.

China has remained the top buyer of gold in the global market and the recent slowdown in its purchasing activities from January to March has contributed to the overall decline.

"China's purchasing program was on pause during the quarter as its foreign exchange reserves remained under pressure," the WGC report said.

In terms of supply, the US continues to be the largest single holder of official gold with 8,133 metric tons. The North America country is followed by Germany and the International Monetary Fund or IMF with 3,377 and 2,814 metric tons, respectively.