Gold consumption in Thailand, the biggest user in Asia after China and India, expanded 73 percent to 140.1 tons last year, according to World Gold Council data. Imports were higher than local consumption in 2013 as some bullion was re-exported, including jewelry.
World consumer demand rose 21 percent to 3,864 tons in 2013 as usage in China surged 32 percent to 1,065.8 tons, an all-time high. Across Asian countries tracked by the council, including India, China, Japan and Southeast Asia, consumption expanded 25 percent to 2,434 tons.
Demand in China in 2014 may drop back to the level seen in 2012, Dick Poon, the general manager at Heraeus Metals Hong Kong Ltd., said in a May 8 interview. Imports by China may decline over the next several months after the yuan weakened, according to Standard Chartered Plc.
Street clashesBullion imports
Imports of bullion nearly doubled to 10.6 tons in March from February, according to the data from the Ministry of Commerce. That may mean demand is starting to improve, Thianpiriya wrote in an e-mail.
“The sharp increase in gold buying last year is a clear indication of the demand response to lower prices,” Thianpiriya said. While prices continued to drop, hurting confidence in gold as an investment, Asia demand isn’t temporary and will continue to support prices, he said.
Thai consumption may drop this year to the 2012 total of about 80 tons, Albert Cheng, the WGC’s Far East managing director, said in an e-mail. Purchases will extend declines as long as India continues to impose high import taxes designed to curb inflows of goods such as jewelry from Thailand, he said.
India raised tariffs on overseas bullion three times last year, and tightened financing to rein in a record current-account deficit and defend the rupee. The government also increased the import tax on gold jewelry.
Goldman’s view
Bullion prices will extend losses as the U.S. Federal Reserve trims its stimulus program, according to Goldman Sachs. The metal will drop to $1,195 in three months and $1,050 in a year, the New York-based bank said in a May 13 report.
Holdings in the SPDR Gold Trust, the largest bullion-backed ETP, dropped to 780.46 metric tons on May 12, the lowest level since January 2009, data compiled by Bloomberg show. The assets fell 41 percent last year.
The number of Thai investors trading gold is significantly lower this year as many still hold bullion bought last year, said Pawan, who last year correctly estimated imports of more than 300 tons. Local demand this year is mainly driven by consumers buying necklaces and small-sized bars, she said.
“If prices continue on a downward trend, gold demand will remain slow,” Pawan said. “We could see investors returning into the market, building up positions, if prices fall to $1,100.”
Bloomberg
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