Demand for gold plunges after Trump win

Gold demand in India could be muted in the second half of 2017

"Retail investment demand is strong too, up 9 per cent year-on-year with demand at over United States dollars 11 billion in Q1".

Global gold demand in Q1 2017 was 1,034.5t. "The weakness we were looking for in gold has materialized and we do think that current prices represent a good entry point for risk overlay trades", analysts at the bank said.

Total bar and coin demand in the Middle East surged about 48 per cent to 9.9 tonnes albeit from the low base of 6.7 tonnes, led by higher demand from Turkey.

However, there was overall decrease in the global demand for gold in the same quarter though there was a slight increase in demand for the yellow metal for investment purposes in the form of bars and coins along with jewellery, the report said.

Gold supply contracted sharply in Q1: down 12% to 1032 metric tons, while the demand declined by 18 percent to 1,034.5 metric tons year-on-year.

According to the World Gold Council, money flowing into gold exchange traded funds (ETFs) globally was a third lower in the first three months of the year compared to the first quarter of 2016.

There was an 18-percent decrease in the first quarter of 2017 compared with the same period past year, with demand hitting 1,034.5 tons, the report said.

Central bank demand continued to slow, with 76 tonnes added to reserves, and this was down 27% from a year ago. As a percentage of total reserves, however, China's gold remains comfortably above 2%, reaching as much as 2.4% as the gold price rose during Q1.

Demand for gold in India during Q1 2017 was at 123.5 tonnes against the 107.3 tonnes in Q1 2016. Demand firmed slightly in both the jewellery and technology sectors while investment in gold bars and coins grew by nine per cent at 289.8 tonnes.

"Opportunistic purchasing by investors and an increase in restocking, means the gold market is likely to maintain a healthy uptake for H1 2017". Meanwhile, gold ETFs saw flows accounting for 109 tonnes but largely concentrated in Europe.

"Jewellery demand is still in the doldrums, although there are signs of improvement, especially from India where the gradual remonetisation of the economy is supporting the jewellery market", Hewitt said. Trade in gold and jewellery reached Dh65.6bn a year ago, accounting for 27 per cent of the total gold trade. While mine production was "little changed" from Q1 2016, clocking in at 764 tonnes, overall supply sank 12 percent and came in at 1,032 tonnes. "At this price level even investment demand is emerging", said Mukesh Kothari, director at bullion dealer RiddiSiddhi Bullions in Mumbai.

You can follow the World Gold Council on Twitter at @goldcouncil and Like on Facebook. "People are uncertain, it is generally good for gold", said Mulligan.

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