Global gold demand eases due to high prices: report

ANKARA (AA) - Global demand for gold was sharply down in the third quarter of 2016 from a year earlier as its rising value deterred customers, according to a new World Gold Council report.

There was a 10 percent decline in the third quarter of 2016 compared to the same period last year, with demand hitting 992.8 tons due to high prices dissuading both investors and people from buying gold, the council said in the report released Tuesday.

“High prices were the key reason for continued weakness in the jewelry sector, which has been severely depressed throughout 2016 so far. Barring just three or four very minor exceptions, jewelry demand fell in every consumer market that we track,” said the report.

Demand for both bullion and jewelry was 3,322 tons from January to September, data showed.

The council said Exchange-Traded Products (ETPs) were the only area of growth, with inflows of 145.6 tons.

Global investment in exchange-traded funds was 335.7 tons in the third quarter, a rise of 44 percent over the same period last year.

According to the report, a third successive quarter of growth in ETPs brought cumulative inflows to 725 tons in 2016 so far.

“Negative interest rate policies and political uncertainty – linked to the looming presidential vote in the U.S. and the prospect of European elections next year – were the key factors driving these inflows,” said the report.

The council stressed that consumer demand for jewelry fell 21 percent to 493 tons year-on-year in the third quarter, the largest decline since Q2 2014 and the lowest third quarter for jewelry demand since 2011.

Bar and coin demand was contrastingly weak in Q3, falling by more than a third to 190.1 tons. Year-to-date demand for these products of 664.2 tons was the lowest since 2009. Turkish Central Bank purchases also fell 51 percent to 82 tons.

As a traditionally important market for gold, Turkey also saw a sharp decline in gold demand as the country struggle on many fronts.

“Notwithstanding the impact from cross-border conflict, the jewelry market in Turkey faced a number of headwinds – namely: the slowing economy; record local prices; and uncertainty following the attempted coup,” said the report.

The 22 percent drop in Q3 demand took year-to-date demand to 27.3 tons, down 20 percent from 2015.

“Prospects for the fourth quarter remain weak as political instability and continued lira weakness frame the consumer picture,” the report said.