Last week, the World Gold Council (WGC) released its annual Gold Demand Trends Full Year 2014 report, and many gold bugs and investors were interested by what the report highlighted, particularly that central banks, despite their intentions of embarking upon a currency war, were huge buyers of the yellow metal.
Although global gold demand slipped four percent from 2013 to 3,923.7 tonnes, precious metals experts argue that it was likely because of the fact that consumer demand wouldn’t meet the previous year’s record increase.
Last year’s supply of gold reached 4,278.2 tonnes, which was pretty much the same as in 2013.
One element of the report that is certainly turning heads is that central banks were major contributors to the gold demand. In 2014, central banks purchased 477.2 tonnes, up 17 percent, as part of efforts to diversify away from the United States dollar.
The Bank of Russia was the biggest buyer of gold, adding 173 tonnes to its supply. Russia now maintains an estimated 1,200 tonnes of gold, or roughly 12 percent of overall reserves.
Investment demand was a major factor in the global gold market as it rose two percent to 905 tonnes last year. However, total bar and coin investment tumbled 40 percent because investors held back from making purchases as they bought a record amount in 2013. The decline in bar and coin investments was offset in the exchange traded funds (ETFs) outflows slowdown from 880 tonnes to 159 tonnes.
The technology sector saw the lowest demand for gold. In fact, the 289 tonnes was the lowest level since 2003. The WGC noted that it was due to the “sluggish economic conditions in key markets and ongoing substitution away from gold.”
Finally, the jewelry industry saw a significant drop in gold demand in the second quarter, but did slightly recover following that period. In 2014, demand in the jewelry sector dipped 10 percent to 2,152.9 tonnes.
“2014 was a year of stabilisation and innovation in the gold market, with annual gold demand down by just 4% after the record-breaking level of buying seen in 2013. It was a standout year for Indian jewellery, despite government restrictions on gold imports, reinforcing the nation’s affinity with gold. Meanwhile Chinese gold demand returned to those last seen in 2011/2012 as consumers and investors took time to digest the substantial volumes accumulated in 2013,” said Marcus Grubb, Managing Director, Investment Strategy at the World Gold Council, in a statement.
“What’s particularly notable about 2014 is that the striking shift in physical gold demand from West to East is now being followed by gold infrastructure development in Asia. New products and trading platforms were introduced like the Shanghai Gold Exchange International Board, the ‘Gold Send’ mobile app in Turkey and the new kilobar contracts in Singapore and Hong Kong – all designed to make gold more accessible to greater numbers of buyers in the East.”
At the time of this writing, gold is trading at around $1,210.
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