Global gold demand fell 24 percent in Q1 2016

Gold demand amounted to 781 tons in the first three months of this year, down 24 percent on an annualized basis. The sharp decline in demand was mainly due to a significant drop in demand from key Asian consumers, including China and India.

The sharp rise in gold prices during the first quarter led to a decline in gold purchases in Asian countries. Incidentally, gold prices rose nearly 17 percent during the quarter, reaching their highest level of $ 1,270 an ounce. This is the largest quarterly rise in gold prices in nearly 30 years. The skyrocketing gold price is weighing down demand for gold, as consumers have postponed their purchases in anticipation of a cooling of high prices. Indian jewelry demand hit 8-year lows during the first quarter, plummeting 56 percent. Chinese jewelry consumption fell 28 percent in three months.

Gold prices are likely to decline back in the short term due to downturn in demand from the Asian region. A correction in gold prices to $ 1,200 an ounce will help restore demand from the east, which could keep prices well above cyclical lows. A recovery in demand is likely to occur later this year. After that, gold prices could resume their rise to about $ 1,300 an ounce.

At the same time, gold production decreased slightly by 0.4 percent to 733 tons during the first quarter of this year. The gold scrap market ended with an increase in shipments of 310 tons in the first quarter.