Gold demand remains flat, slight uptick in last quarter

Amounted to 35.9 tonnes in 2015, increases 0.84% year-on-year

KARACHI:

Gold’s consumer demand in Pakistan during 2015 remained flat on a year-on-year basis, according to statistics on global gold demand released by the World Gold Council (WGC) on Thursday.

Gold’s consumer demand in Pakistan clocked up at 35.9 tonnes in 2015, showing a marginal increase of 0.84% from consumer demand of 35.6 tonnes in the preceding year.



In October-December, however, quarter-on-quarter consumer demand of the precious metal in the country increased 13%, WGC data shows.

Consumer demand of gold consists of two major categories: jewellery demand and total bar and coin demand. Flat consumer demand during 2015 was caused by a drop in the category of total bar and coin demand in the country, WGC data shows. It declined 7.9% over the 12-month period, although gold demand for jewellery in Pakistan rose 5.9% during the year.

Pakistan’s share in the global consumer demand of gold is miniscule. With world consumer demand at 3,426.5 tonnes, Pakistan’s share was a little over 1% in 2015.

The flattish trend in Pakistan’s gold consumer demand in 2015 was largely in line with the global trend. Overall consumer demand of gold last year decreased 1% internationally mainly on the back of subdued demand in the first six months of 2015. WGC noted that extreme weather patterns in India affected its consumer gold demand whereas Chinese demand suffered because of the domestic economic conditions and stock market volatility.

According to a gold dealer in Karachi’s Saraf Bazaar, sales of jewellery have gathered pace in the last few months. He attributed the recent increase gold buying to gold prices that have remained subdued for some time now.



Gold traded at Rs48,200 per tola (11.6 grams) on Thursday, according to All Sindh Saraf and Jewellers Association (ASSJA). The local gold market has been in the grip of a long bearish trend, as its price has remained almost flat in the last four years, data compiled by ASSJA shows.

Given the small size of the Pakistani gold market, local prices are determined largely in line with global trends. International gold prices fell by as much as 11% last year, resulting in each of the three gold-backed mutual funds managed by Pakistani asset management companies posting a net loss in 2015.

Unlike traditional buying and selling of gold biscuits in Saraf Bazaar, these mutual funds offer investors a standardised platform for regulated gold investing that is in sync with the international gold market.

In line with global trends, Atlas Gold Fund posted a loss of 4.4% while the return of UBL Gold Fund clocked up at -6.9% in 2015. Launched last August, Meezan Gold Fund had posted a loss of 5.2% by the end of 2015.



But retail investors look forward to 2016, as a long-awaited rebound in gold prices is finally in sight. Its international price has surged 12.2% since January 1, resulting in the local per-tola price of gold rising 8.8% over the same period.

Published in The Express Tribune, February 12^th, 2016.

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