Global gold demand in 2017 fell by 7 per cent to 4,071.7 tonnes compared to that in 2016 due to lower inflows into ETF, according to a World Gold Council (WGC) report.

The overall demand in 2016 was 4,362 tonnes, WGC said in its latest Gold Demand Trends report. Even as inflows into exchange-traded funds (ETFs) continued steadily throughout the year, it was 202.8 tonnes, around one-third of 2016’s inflows, which saw exceptional levels, it said. Similarly, the full-year bar and coin demand fell by 2 per cent as US retail investment dropped sharply.

Central bank demand also dipped by 5 per cent during the year by 371 tonnes from 390 tonnes in 2016, with Turkey joining Russia and Kazakhstan as the most prominent buyers. Bar investment was broadly stable, while coin investment slid by 10 per cent. Overall, bar and coin demand fell 2 per cent on a sharp drop in US retail investment to 1,029.2 tonnes in 2017 from 1,048.7 tonnes in 2016.

However, the year saw a recovery in both jewellery and technology demand, which made modest gains compared with 2016, the report said. It was primarily due to improving economic conditions in India and China and an increase in gold containing technology, like smart phones and tablets, that boosted demand.

The total jewellery demand grew by 4 per cent (82 tonnes) to 2,136 tonnes from 2,054 tonnes in the same period last year. Last year saw the first annual increase in jewellery demand since 2013, but the sector remained weak in a historical context, it said. “India and China eclipsed other markets, together accounting for 75 tonnes of the 82 tonnes increase in full-year demand,” it added.

Similarly, demand in the technology sector increased by 3 per cent to 333 tonnes from 323 tonnes in 2016. “It’s not surprising to see overall gold demand down given the backdrop of monetary policy tightening and strong equity markets in 2017, but the market is not in bad shape.

The US dollar gold price was up 13 per cent and institutional investors, especially in Europe, continued to add gold to their portfolios as a hedge against frothy asset prices and geopolitical uncertainty,” WGC Head of Market Intelligence Alistair Hewitt said.

Jewellery demand, however, picked up as economic conditions improved in China and there were positive policy changes for the industry in India, while next-generation smartphones boosted gold demand from technology companies, he added. Even as mine production inched to a record high of 3,269 tonnes in 2017, recycling fell 10 per cent, leading to total supply dipping by 4 per cent to 4,398 tonnes compared to 4,591 tonnes in 2016.

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