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Gold demand from Asia plummets in Q1-16 – GFMS

1.8930299Gold prices that hit a 13-month high last month are likely to fall back in the short term because of a slump in demand from key Asian consumers, GFMS analysts at Thomson Reuters said in a report on Tuesday.


Global gold demand tumbled by 24 percent year on year to 781 tonnes in the first three months of the year, its weakest quarter in seven years, as buying from leading consumers India and China plummeted, GFMS said in the first-quarter update to its Gold Survey 2016.

That coincided with a sharp rally in prices, which posted their biggest quarterly increase in nearly 30 years. Prices peaked last month at their highest since February 2015.

“The rally so far in 2016 developed too rapidly in our view, and with poor demand from Asia we expect the gold price to ease sooner rather than later, particularly if fears about the global economy continue to abate,” GFMS said in the report.

Demand for the metal will improve later in the year, however, as lower prices attract Asian buyers back to the market, it said.

“This correction to comfortably below $1,200 will aid a recovery in demand from the east, and this will ensure that prices stay well above cyclical lows,” it said. “Thereafter, gold prices are set to resume their bull run (to) around $1,300 an ounce towards year-end.”
Indian jewellery consumption fell 56 percent to an eight-year low in the first quarter, GFMS said, negatively affected by surging prices and a jewellers’ strike that persisted through March.

Chinese jewellery demand slid 28 percent year on year, its weakest start to a year since the GFMS data series began in 2000. Chinese gold demand is expected to decline in 2016 overall as jewellery fabricators remains pessimistic towards consumption volumes, GFMS said.

Source: http://classfmonline.com/1.8991285

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