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Roaring Bull Market in Stocks Means Shoppers Want Less Gold

Thursday, 14 May 2015 01:04 PM

Rallying Chinese shares and a six-year U.S. bull market is cutting the appetite for gold baubles.

Global demand for jewelry, coins and bars fell 5 percent in the first quarter from a year earlier as shoppers in the Middle East, China and U.S. reined in purchases, the World Gold Council said in a report on Thursday. U.S. and European investors bought bullion through funds backed by the metal in the three months through March, while China’s equity boom led buyers away.

Gold prices dropped about 7 percent in the past year, trailing returns for the dollar, global stocks and corporate bonds, on signs the Federal Reserve is moving closer to raising interest rates. In China, where people buy more gold than anywhere else, the country’s main stock gauge doubled in 12 months.

“Attentions are being diverted by absolutely rampant stock markets,” Alistair Hewitt, head of market intelligence at the London-based council, said by phone. Consumer demand in some countries was hurt by “a weakening economy with people unsettled by slower growth,” he said.

An ounce of gold fetched $1,214.25 in London on Thursday, according to Bloomberg generic pricing.

Global jewelry demand slipped 3 percent to 600.8 metric tons in the first quarter, according to the report. In China, the purchases fell 10 percent from last year’s record, while Indian sales jumped 22 percent as import restrictions eased.

Bars and Coins

Worldwide bar and coin buying dropped 10 percent to 253.1 tons in the three months through March, the council said. The declines were offset by money flowing into exchange-traded products. Investors bought 22.7 tons through the funds, the first quarterly increase since 2012, data compiled by Bloomberg show.

“You are more likely to get the institutional investors involved” in ETPs, Hewitt said. “We are not going to say that bearish sentiment has completely gone away, but it is a subtle improvement.”

Central banks added gold to their reserves for a 17th straight quarter, the report showed. The 119.4-ton purchase was the smallest since 2013. For the whole year, nations will probably buy 400 to 500 tons, Hewitt said.

Mine production increased about 2 percent to 729.2 tons, while supply from recycled metal declined 3 percent to 355.1 tons, according to the report.

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Rallying Chinese shares and a six-year U.S. bull market is cutting the appetite for gold baubles.
bull, stock market, gold, investors
Thursday, 14 May 2015 01:04 PM
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