Gold prices sparks buying spree

Photo: Anthony Joh

Low gold prices have sparked a buying spree around the world, with demand rising 27 per cent.

The precious metal has struggling this year so far, with values declining amid cooling demand, due to headwinds such as the recovering US economy and looming interest rate hikes. That slip in price, though, has boosted demand from investors and buyers alike, according to the World Gold Council.

The group's latest report show that total gold demand in Q3 2015 stood at 1,121 tonnes, an increase of 8 per cent year-on-year.

Investment demand rose 27 per cent to 230 tonnes, with bar and coin purchases were up by a third on Q3 2014 with Western markets in particular showing a surge. In the US, bar and coin demand reached its highest total in five years, up 207 per cent to 33t.

Europe also saw strong levels of demand in the investment sector as ongoing concerns surrounding the Greek debt crisis and uncertainty in Eastern Europe - partly fueleld by continuing tensions between Russia and Ukraine - pushed demand for the safe haven up by 35 per cent.

In China, one of the most active gold markets in the world, investment demand grew by an even bigger 70 per cent to 52t, which was primarily driven by price weakness. In India, the investment sector saw its first increase since Q3 2014, up 6 per cent year-on-year to 57t. Overall jewellery demand for Q3 2015 was 632t compared to 594t in Q3 2014, up 6 per cent annually.

"The long term indication is that supply will remain constrained as the mining indusry continues to proactively manage costs and optimise its operational performance," says the World Gold Council.

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, adds that the consumer response to the price dip "was a truly global occurance", with the US recording the most dramatic growth. Indeed, US Mint Eagle sales reached their highest level since Q2 2010.