RESEARCH AND ANALYSIS

The World Gold Council today shed light on global demand for gold in the three months prior to April’s price plunge.

Between January and March 2013, demand for jewellery, bars and coins grew thanks largely to buyers in China and India. Central banks also remained significant acquirers of gold.

Nevertheless, total world gold demand for the period was down 13% from a year ago at 963 tonnes and 19% below the fourth quarter of 2012.

The culprit, according to the WGC’s latest Gold Demand Trends report, was an outflow from gold exchange-traded fund holdings amounting to 177 tonnes, mainly the result of US holders taking profits and moving into equities.

Download Gold Demand Trends Q1 2013

IN THE NEWS

Gold’s biggest price drop in three decades provoked clamour with buyers queuing up for the metal this week. Nigel Moffatt, Treasurer at The Perth Mint, talks about the demand outlook for gold with Zeb Eckert on Bloomberg Television.

WEBSITE INFORMATION

Gold futures slumped to a 21 month low last week and most of the media is talking about the ‘bull’ that’s turned into a ‘bear’.

How are Perth Mint clients reacting? Looking at the level of activity on www.perthmintbullion.com today, they’re stepping up purchases of physical gold and silver.

In fact, our bullion website just recorded its highest daily turnover of the year so far and one of its best days of the past 12 months.

This tells us that that not everybody believes the gloom and instead sees this as the perfect buying opportunity.

Gold Coin Sales Rocket

Sales of Australian gold bullion coins have been especially robust. During Q1 2013 buyers acquired a thumping 48% more ounces of Kangaroos and Lunar coins than in the same period last year.

RESEARCH AND ANALYSIS

Thomson Reuters GFMS said Thursday that it looks for gold to climb back to the mid-$1,800s before the end of the year (reports Allen Sykora of Kitco News).

If so, the consultancy said, this would mean yet another higher annual average price of gold, continuing what is already an 11-year run. However, the firm also said it looks for an improved macroeconomic backdrop to eventually trigger a bear market.

Thomson Reuters GFMS released its forecast while launching its Gold Survey 2013 at events in London and Johannesburg.

The report said that U.S. developments will remain a key factor driving gold price movements over the course of 2013. While improving but still patchy economic data contributed to a softening of the gold price in recent months, the consultancy said it feels this is already is already priced into the market. Meanwhile, there is a continued lack of confidence that ongoing debate over budget cuts and raising the debt ceiling will result in a satisfactory and timely resolution.

“Gold is likely to remain very sensitive to U.S. monetary policy, and even though we’ve had some hawkish noise from some within the Fed, it’s difficult to see a material unwinding of the QE (quantitative easing) program until well into 2014 and so that should continue to underpin the gold price in 2013,” said Neil Meader, head of precious metals research and forecasts at Thomson Reuters GFMS.

The report also expects ongoing support for gold from developments in Europe. Much of the continent’s economic outlook is largely priced into the market, but there “remains significant potential for gold-friendly shocks,” as reflected by a price uptick in mid-March as the financial crisis unfolded in Cyprus, the consultancy said.

Other supportive factors cited include a continued low interest-rate environment and some investors’ fears over the potential for inflation to become resurgent.

However, Thomson Reuters GFMS did offer caution for further into the future. “There’s arguably clearer light at the end of the tunnel in that we can perceive a return to something more like normality for the macro-economic backdrop, and that could easily entail the start of a secular bear market, perhaps in late 2013 or more probably in 2014,” Meader said.

Read the full story on Kitco News.

FREQUENTLY ASKED QUESTIONS

Having an official face value is part of what gives coined bullion its legal tender status.

Although face value represents the price the Reserve Bank of Australia would redeem an Australia bullion coin for, in reality, it’s nothing more than a nominal figure advised by Federal Treasury.

Take our 1oz Australian Kangaroo gold bullion coin, for example, which has a face value of $100. That’s a ridiculously low figure compared to the value of its actual gold content, which is tied to the ‘spot’ market.

The face value of a bullion coin does not reflect the value of its precious metal content.

So while it is important for investors to ensure their bullion coins do have an official face value, they need take little notice of it thereafter.

By selling your bullion coins to The Perth Mint or a reputable coin dealer, you’ll receive much more - a fair price close to the metal’s prevailing spot rate.

And if it’s highly sought-after, the coin could have some numismatic value, meaning you may be able to find someone willing to pay a premium!

RESEARCH AND ANALYSIS

The World Gold Council's latest study of the gold market reports the value of gold demand in 2012 reached an all-time high, up 2% to $236.4 billion.

On a tonnage basis, it found gold demand was down 4% on 2011 to 4,405 tonnes – the first dip since 2009, but still the second highest level of gold demand ever recorded.

The average price of gold during 2012 was $1,669.0 per oz, up 6% from $1,571.5 per oz in 2011, it said.

Global gold demand in Q4 2012 was 1,195.9 tonnes(t), up 4% on the same quarter in 2011. In value terms, demand reached $66.2 billion.

Get The Report

Download The World Gold Council's Gold Demand Trends Q4 & Full Year 2012.