Gold demand remains robust as economic conditions improve

Total identifiable gold demand for the third quarter of 2009 reached 800.3 tonnes, or $24.7 billion in dollar terms, up 15 per cent from the second quarter, as gold’s long-term store of value and wealth preservation qualities continued to attract investors and consumers, according to a report released by World Gold Council (WGC).

Jewellery and investment demand in non-western markets rebound from the very low levels seen in the first quarter, while industrial demand started to recover in response to an improvement in economic conditions.

However, the Q3’09 Gold Demand Trends Report, released today by WGC, shows a 34 per cent drop on year earlier levels due to an exceptionally strong Q3’08, which saw soaring demand in response to the deepening global financial crisis and as many non-western markets responded to a dip in the gold price in that quarter. To address this, WGC compared Q3’09 against the five year Q3 demand average to 2007, which showed tonnage down just 4 per cent on this basis.

Total demand for gold in the Middle East region in Q3’09 was down a third when compared to the exceptionally strong quarter recorded in Q3’08, but up 6 per cent on Q2’09 levels. When looking at the more representative five year September quarter average comparison this shows a tonnage decline of 14 per cent. Jewellery demand for Q3’09 compared with Q3’08 was down 34 per cent (but up 2 per cent quarter on quarter), whilst retail investment demand was retail demand was down 11 per cent compared with Q3’08 (but up 71 per cent quarter on quarter).