The World Gold Council has released Gold Demand Trends for the First Quarter of 2010. The report indicates a drop in gold demand for the covered period, but suggests that demand will be strong for the rest of the year.
Identifiable gold demand during the first quarter of 2010 was 760.2 tonnes, representing a drop of 25% compared to levels seen for the first quarter of 2009. The change was driven by a 69% decline in investment demand, offset by a 43% increase in jewelry demand and 31% increase in demand from industrial sectors.
The drop in investment demand was driven by a sharp decline in demand from ETFs and similar products. Total demand was only 3.8 tonnes for the quarter compared to 465.1 tonnes for the year ago period. Comparisons are also influenced by an unusually strong year ago period.
Investment demand did pick up right after the close of the first quarter, when concerns about Greece and debt contagion fears led to a significant pick up in demand for physical gold. In a previous post, I explored how physical gold demand had surged compared to the muted levels of the first quarter. More significantly, there has also been a resurgence in demand from the GLD ETF in the past month.
In their forecast for strong demand for the remainder of 2010, the WGC cites jewelry demand in India and China, as well as investment demand for the United States and Europe as the drivers.
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