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GLOBAL gold demand fell to an eight-year low in the third quarter of 2017 following a “softer quarter” of demand in the jewellery sector and significantly lower inflows into exchange-traded funds (ETFs), latest data from the World Gold Council (WGC) shows.

The ‘Gold Demand Trends’ report for the third quarter shows a nine percent year-on-year decline in gold demand to 915t, the lowest level since the third quarter of 2009. The year-to-date gold demand decreased by 12 percent.

WGC member and market relations head John Mulligan told Mining Weekly Online that the third quarter proved to be somewhat challenging for gold demand, but that the drop had masked some underlying factors.

Global jewellery demand contracted by three percent to 479t during the quarter under review, accounting for 17t of the year-on-year decline, as the newly introduced three percent goods and services tax and tighter anti-money-laundering regulations around transactions in India deterred buyers.

The deterioration marked the weakest third quarter in the WGC’s 17-year data series for jewellery demand, the report noted, with year-to-date demand of 1 457.3t – only three percent higher than in 2016 – showing a “very weak year” for jewellery demand.

After three consecutive quarters of growth, demand in India plunged 25 percent year-on-year to 114.9t in the third quarter, while gold jewellery demand in mainland China recovered to 159.3t, a 13 percent improvement year-on-year, after a consecutive run of 10 contractionary quarters. However, China’s recovery remains weak from a longer-term

perspective, with demand 15 percent below the five-year quarterly average of 187.1t.

While ETFs recorded positive inflows of 18.9 t, this was 87 percent lower than the unprecedented high of 144.3 t recorded in the third quarter of 2016.

“Investors continued to favour gold’s risk-hedging properties, but the greater focus was on buoyant stock markets,” the report commented. — Miningweekly