According to the WGC, the total gold consumed during the quarter stood at 115.6 tonnes, down 12 per cent from the same period previous year.
On the other hand, gold exchange-traded funds (ETFs) posted their fifth consecutive quarter of inflows, though they were down on previous year, showing investment in the first quarter was mixed. Total investment demand was down 27% at 287 mt, WGC said in its Gold Demand Trends Q1 2018 report. The total supply of gold increased by 3% to 1063.5t, primarily due to a modest increase in producer hedging. The Dow Jones industrial average hit a record high on 26 January, the last day of the Davos meeting of world leaders, but fears of higher interest rates and trade wars prompted a big sell-off on global stock markets in February, which in turn drove up gold prices.
The council predicted positive momentum in the coming quarters and forecast a demand of 700 to 800 tonnes during the year.
It was offset by a net inflow in North America where investors parked their money in gold-linked investments on the back of a weak U.S. dollar and stock market pullbacks.
Global jewelry demand was roughly flat, down 1%, at 488 mt.
While all major markets like India, China, Germany and the USA saw a dip in the demand for gold bars and coins in the first quarter, ETFs registered inflows for the fifth straight quarter but exclusively due to a growth in North America region. This was largely caused by a fall in investment demand for gold bars and gold-backed exchange-traded funds (ETFs), as a subdued gold price environment hampered demand.
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FactSet, the financial data group, points out that based on the most-active contract settlement of $US1,309.30 at the end of 2017, gold futures were up 1.4% for the first quarter and year to date which was smallest quarterly rise since the first quarter of 2011.
Presenting the data at a press conference in Mumbai, Somasundaram P.R., Managing Director, India for the World Gold Council said rising local gold prices led to the second weakest quarter for jewellery demand in nearly ten years.
Russia, Turkey and Kazakhstan were on the top of the list of central banks buying gold, adding a combined 91t.
The report showed that official gold reserves reached the highest first quarter level, jumping 42 percent annually to 116.5 tons in the first three months of the year.
Gold demand from technology companies rose by 4% year over year to 82.1 tonnes as demand for gold in the wireless and printed circuit board industries rose 5% to 65.3 tonnes. "Mine production was fractionally higher at 770t", the WGC said.