Global gold price drops by 7.1 percent as demand for jewellery in Asia plummets
For the last five years, India and China have been going through a consumption boom that has resulted in demand for jewellery and therefore the price of gold to be propped up.
However, as economic forecasts in both of Asia’s major economies show signs of retreat, this demand has sunk, causing the gold price to fall by 7.1 percent in the second quarter of this year. Demand across the world for gold in the second quarter saw a drop to 990 metric tonnes, significantly less than the 1,065.8 tonnes for the same period in 2011.
The World Gold Council, who lobby on behalf of the gold mining industry, say that India and China account for around half of gold consumption in the world, and so the economic retrenchment is causing the drop in value.
The group’s managing director of investment research, Marcus Grubb, believes demand will increase in the second half the year, with policies being adjusted to boost growth. He told Bloomberg: “Gold persisted to be very expensive for Indian consumers because of the weak rupee and that’s choked off demand.
“The continuing economic problems around the world have started to rekindle expectations of some easing of policy. With a seasonal likelihood of stronger demand in India and then in China, the second half is going to be stronger than the first half for the gold market.”