Alistair Hewitt, Head-Market Intelligence, World Gold Council, sees steady growth in demand for jewellery.

Will consumption demand for gold revive?

The economic drivers for jewellery demand are robust. The outlook for two of the leading gold nations — India and China — is positive. In India, over the past seven years, 140 million people have been lifted out of poverty and these people will save a portion of their new-found income in gold. By 2020, annual demand for gold in India will increase to over 1,200 tonnes.

In China, the middle class population is growing and would swell to 500 million by 2020 from 300 million now. So, there will be a steady growth in demand for jewellery.

What is the trend in supply?

In terms of recycling, the year to date figures are the lowest since 2007 and we expect it to stay low in 2015. In our September quarter review we noted that mine production had risen by 1 per cent and this is because we have seen a number of legacy projects coming online this year. There are long lead times for mines coming into production and according to an SNL Report, between 2004 and 2017, the development time for 126 mine sites will be 17 years. Mines are now adjusting their production, so we expect mine production overall to plateau over the next four quarters.

If oil continues to drop, will gold follow suit?

If consumers have more cash in their wallets, they are likely to spend more on gold in terms of saving and adornment. In the US, for instance, if consumers find that they have a little bit more disposable income because they are spending less on petrol and diesel, their spending pattern will change and that will benefit gold. Gold jewellery demand is already on a strong upward trajectory in the West, especially in the US, and has been increasing for the past 18 months on a quarter-on-quarter basis.

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