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Metals Update: Demand For Both Gold and Platinum Jewelry Leaps 12% | May 22, 2013 (0 comments)
US Gold Jewelry Demand Grows Significantly for First Time Since 2005
London, United Kingdom—Consumer appetite for gold jewelry is voracious, according to the latest World Gold Council Gold Demand Trends report. Despite--or perhaps because of--the metal's price volatility, the report shows a 12% year-on-year increase in demand for gold jewelry for the first quarter of 2013.
The increase was driven mainly by Asian markets, though the United States also posted a 6% increase in demand over the same period in 2012. This is a significant increase for the U.S. market, the first since 2005. Demand in China rose 19% for the quarter, and both India and the Middle East posted 15% gains.
Demand for gold was also driven by an increase in bar and coin sales: up 22% in China, 52% in India, and 43% in the United States, compared with the same quarter in 2012. Central Banks remained significant acquirers of gold, making purchases in excess of 100 tons for the seventh consecutive quarter. Yet despite the significant year-on-year increases, overall total global demand for gold in the first quarter of 2013 was down 19% from the fourth quarter of 2012.
Marcus Grubb, managing director of investment at the World Gold Council, said, “The price drop in April, fueled by non-physical moves in the market, proved to be the catalyst for a surge of buying that has left many retailers short of stock and refineries introducing waiting lists for deliveries.” Sales of bars and coins, jewelry, and consumption in the technology sector still make up 81% of the market, he said.
“What these figures show is that even before the [price decline] events of April, the fundamentals of the gold market remain robust with growing demand in India and China, central banks consistently adding gold to their reserves and strong buying of investment products such as gold bars and coins.”
The average gold price of US $1,632/oz was down 5% from the average Q4 2012 price, and down 3% on the same period the previous year. Q1 2013 total mine production was up 4% on last year; recycling fell 4%, resulting in a total supply that is 1% higher than a year ago
For the full Q1 2013 Gold Demand Trends report, which includes comprehensive data provided by Thomson Reuters GFMS, click here and a video can be seen here.
Platinum Supplies Fall To 12-Year Low; Jewelry Demand Up
New York, NY— Primary supply of platinum fell by 13% to 5.64 million ounces last year, to the lowest level in 12 years, due to a steep decline in output from South Africa. This put the platinum market in deficit by 375,000 ounces, according to Johnson Matthey’s Platinum 2013 report published last week. Total demand for platinum in 2012 was down by 0.6% to 8.05 million ounces, and platinum recycling came to 2.03 million ounces, marginally less than in 2011.
Platinum shipments by South African producers fell by 16% to 4.10 million ounces in 2012. At least 750,000 oz of production were lost to legal and illegal strikes, safety stoppages, and closure of some marginal mining operations. Changes to supply from other regions were insignificant by comparison.
Gross world jewelry demand for platinum grew 12% in 2012 to 2.78 million ounces. It was boosted by expansion of the retail jewelry distribution network in China. Investment demand for platinum was steady at 455,000 oz., with strong investor interest in North America and a rise in the minting of platinum coins. Gross demand for platinum in autocatalysts rose by 1.7% to 3.24 million ounces. Weak European demand was more than offset by higher demand in Asia and North America.
Industrial demand for platinum in 2012 fell by 21% to 1.57 million ounces. It was affected by a slowing of expansion in the glass industry, reduced production of hard disk drives in the electrical industry, and the drawdown of inventory in both sectors. Chemical demand was slightly lower than in 2011, while demand for platinum in other applications was stable.
Johnson Matthey expects primary supply of platinum in 2013 to be a little higher than last year, with broadly the same level of sales from South Africa as in 2012 and slightly higher shipments from other regions. Gross demand for autocatalysts is unlikely to grow and jewelry demand may well decline slightly, leaving leave auto, industrial, and jewelry demand more or less matched by supply. If investment demand repeats last year’s pattern of net growth, the market for platinum may be in a slight deficit in 2013.
Palladium, meanwhile, also moved into a deficit of 1.07 million ounces in 2012 from a surplus of 1.19 million ounces in 2011, and supplies are expected to fall further in 2013. This was the lowest since 2002; the result of lower primary and secondary supplies, record demand from the auto industry and a substantial swing in investment demand from heavily negative in 2011 to strongly positive in 2012.
Demand for palladium jewelry was anemic in China, steady in most other regions, and even slightly higher in Europe, where it has become popular for men’s wedding bands.
Top image: blogs.elpais.com