More stable gold prices, a booming economy and the increasingly successful Akshaya Thritiya festival in April all contributed to a strong second quarter despite prices being in the mid-$600s/oz.
Strong economic growth, reduced price volatility and the auspicious Year of the Golden Pig saw China's gold demand increase 32% in tonnage terms from year-earlier levels to 76 tonnes.
In the Middle East, strong economies and stable prices influenced demand for gold which rose 20% in tonnage terms to 97.5 tonnes compared with the same quarter in 2006. Turkey enjoyed second-quarter records for both jewellery, at 52.2 tonnes, and net retail consumption, at 20.5 tonnes, an increase of 14% and 5% respectively on the previous year.
In Russia, where jewellery demand has grown steadily over recent years, consumption increased by 27% to 20.3 tonnes compared with Q2 last year. Globally, net retail investment rose by 51% in tonnage terms to 132.9 tonnes, and 60% in dollar terms to $2.9 billion, compared to Q2 2006.
Total identifiable investment fell just 4.8% in tonnage terms to 130.4 tonnes and was 1% higher in dollar terms at $2.8 billion compared with Q2 2006.
Running counter to the generally stronger trend, investment in Exchange Traded Funds and similar products was negative over the quarter, with small net redemptions of 2.6 tonnes.
The redemptions were confined to the market leader streetTRACKS Gold Shares and coincided with a much steeper decline in speculative long positions on the Comex division of the New York Mercantile Exchange.
While the two vehicles are not directly comparable, GLD effectively followed the trend in the broader gold market, suggesting that investors and traders are increasingly accepting the ETF as simply another component of that market. Renewed creations in GLD since the end of the period under review have carried assets to a new peak over 500 tonnes.
Global industrial demand saw a further steady increase over year-earlier levels of 2% in tonnage terms to 116.5 tonnes; this was equivalent to a 9% increase in value terms to $2.5 billion, a new quarterly record.
Electronics demand, which grew strongly in 2006, also recorded a further 2% increase in tonnage compared to Q2 2006. Gold supply remained constrained in Q2. Stable prices reduced the supply of scrap, and this served to offset increased central bank selling.
marketing@alchempro.com
